The Backlash From E Snooping

Like all new technologies, the Internet is creating undreamed-of conflicts. Case in point: The very nature of the Web makes it easy to collect and collate information about people who shop at or even simply visit a Web site, without their knowledge. Indeed, using such information is an important part of the business model of many Net companies.

But Net companies are discovering that consumers also care about their privacy. Examples of a growing concern are everywhere. GeoCities had to settle with the Federal Trade Commission when it sold personal data collected from children without parents' consent. Microsoft Corp. was red-faced and apologetic when it was discovered that the Windows 98 operating system could be used to create a giant database of information about Microsoft customers. Perhaps most notable was the response to Intel Corp.'s plans to ship its newest Pentium III microprocessor with a component that could transmit a serial number whenever the user visits a Web site. The idea of consumers unknowingly leaving behind an ID number when online set off howls of protest, and Intel promised to ship the Pentium III with the identifier in the "off" position.

What's happening is that people are worried that their essential democratic right to privacy is being surreptitiously eroded. The idea of the Net building "dossiers" without customers' knowledge conjures up images of secret files, police states, and the loss of freedom. That will create a backlash that can only injure Internet commerce in the long run.

Equally germane is a truism of the Information Age: Information is a hugely valuable good in its own right. From that perspective, Net companies have been appropriating information that rightfully does not belong to them. It is akin to stealing for Net companies to gather, use, and resell information on consumers without asking permission.

Net companies have to realize that individuals have the right of first refusal on the information of their lives. For companies to use it, they have to say "please" and exchange something for the information. The Net marketplace has made progress in posting privacy policies on Web sites and curbing intrusions. But time is running out for companies to agree on rules of the game to protect privacy before the backlash does permanent damage to the future of E-commerce.

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