Reconciling E Commerce And Privacy

Thanks to the Internet, personal service, once the province of the well-to-do, is increasingly available to the hoi polloi. It's now possible for Net businesses to tailor offerings to any individual's preferences, from gardening to investing. Do you like Chilean cabernets? How about military histories? One-on-one marketing has tremendous potential.

But not until the rules of privacy change. Most people assume they "own" the data of their everyday lives and should have the power to control it. Not on the Net, where the assumption is that data on people belong to whomever can gather the information, unless individuals specifically request to "opt out" of giving up revealing data. There are Web sites that demand personal data to register, then sell it or make it available to marketing partners without requesting permission. There are "cookies," pieces of software downloaded onto an individual's hard drive to track that person's online behavior. These practices defy deep American traditions: individual liberties and ownership of property.

The solution is clear. Net commercial culture must change. Anonymity should be the baseline. Individuals should have an easy choice between "opting in" by providing data to vendors and marketers they trust, and "opting out" to retain privacy. It is up to businesses to offer incentives, such as discounts or personalized shopping, to make it worthwhile for people to give up personal data. If they choose, people must be allowed to surf the Web without being tracked. And they must have the tools to personalize the Web without revealing deeply personal information. A software group, the World Wide Web Consortium, is working on it, but progress is too slow.

The promise of customizing the sale of products and services to individuals is truly revolutionary. It marks a turn away from mass marketing and changes the nature of research, design, and manufacturing. But personalization will never reach its potential without protecting privacy.

    Before it's here, it's on the Bloomberg Terminal.