WASHINGTON Thursday April 19, 2012 – First search, then social media, and now privacy concerns?  The digital world has transformed the way consumers access content; one can search an article they are interested in, subscribe to Google Reader, follow a friend’s recommendation from Twitter or read an article a co worker read via the Washington Post Social Reader on Facebook.  With content companies and social media companies competing for ad dollars and the eyes of consumers, where do the privacy concerns come in, and how is government and industry dealing with these consumer concerns?

Event Highlights

“The Future of Privacy in a Social Media and Networking World” from BroadbandBreakfast.com

Complete Program

“The Future of Privacy in a Social Media and Networking World” from BroadbandBreakfast.com

At Tuesday’s Broadband Breakfast “Social Networking, the End of Media and Future of Privacy,” government officials, industry representatives and advertising experts all weighed in on this question and many more.

Julie Brill, Commissioner of the Federal Trade Commission gave the opening Keynote remarks summarizing the FTC’s recent report setting out new industry privacy framework for a nation that loves to share.

“Before our children can walk or talk, we teach them to share,” said Brill, “So it is no wonder that we have flocked to social media, a platform based on sharing, to share everything from our birth dates to films of our child’s birth.”

Social media has changed the model for news and the way businesses interact with consumers. Brill cited an Ad Age report showing that businesses will spend 27% of their digital budget on social media advertising in the upcoming year which is 20% more than the previous 12 months.

While these numbers are no surprise, concerns about privacy in social media landscape continue to escalate. Brill explains this with a simple analogy, “taking is not sharing…Many privacy problems online arise when companies forget the basic principles of the playroom.”

Brill used the recent Facebook, Google Buzz, and Twitter settlements to highlight the need for industry wide comprehensive privacy programs to disclose changes to privacy policies, changes to information sharing practices and protect against breaches of private user data. These as well as “cases we’ve brought involving new platforms like mobile apps, children’s online services, and data brokers – led us to realize it was time to update our approach to protecting consumers’ privacy.” Brill continued, “We had to take account of the vast changes in technology, the myriad new ways that consumers’ information is collected and used, and the need to better communicate these new practices to consumers.”

The Framework laid out by the FTC a couple weeks ago articulates the best practices for companies that collect consumer data and will help companies develop comprehensive privacy and data security practices.

There are three components of the framework:

Privacy by Design – A call for companies to integrate privacy and security protections into new products.

Simplified Choices for Businesses and Consumers – consumers should be given clear and simple choices that they can implement at convenient and relevant times.

Greater Transparency – companies should provide more information about how they collect and use personal data.

One way, according to Brill, that they can simplify choice, is by calling on industry to develop a Do Not Track mechanism. By developing browser tools, icon-and-cookie based mechanisms, promising to make these mechanisms interoperable and creating technical standards, Do No Track, “has the potential to provide consumers with simple and clear information about online data and use practices, and to allow consumers to make choices in connection with those practices.”

Brill does not believe that Do Not Track will automatically cause users to opt out of tracking. She added, “Google offers its users the ability to refine the types of ads they see through its ‘Ad Preferences’ dashboard, and it also offers its users the ability to opt out of tracking entirely. Consumers seem to appreciate knowing how Google has sized up their interests, and they overwhelmingly exercise more granular choices to adjust the ads they will see, rather than opt out.”

The Commissioner hopes that with a Do Not Track mechanism in place by the end of the year, companies will see improvements in user experience that will lead to greater consumer trust.

With Do Not Track being the first action item to implement recommendations in the privacy report, the FTC lays out four others.

Second, the Commission is calling on mobile companies to work towards improved privacy protection including the development of short and meaningful disclosure . On May 30th, FTC staff will be holding a workshop to address the issues of making mobile privacy disclosures short and effective.

Third, the Commission supports legislation to provide consumers with access to information about them held by so called data brokers. The Commission asks data brokers that compile data for marketing purposes to explore creating a centralized database where they could identify themselves to consumers and explain how they collect data. Additionally these brokers should detail the access rights and choices they provide with respect to consumer data they hold.

The fourth action item, calls on the Commission to hold workshops to recognize the concerns that derive from comprehensive tracking of online consumers done by ISPs and large social networks.

Finally the last item asks the FTC to work with the Department of Commerce to help develop the sector specific codes of conduct articulated in the Administration’s White Paper on Privacy

In addressing the concerns of a reporter about whether the FTC and industry were on the same page regarding collection in terms of what Do Not Track really means, Brill acknowledged that an important issues is how much collection will be part of the choice consumers are given through Do Not Track. Brill explained that the issue of collection is what prompted the FTC to change its language and propose that the choices given to consumers through Do Not Track would depend on the context of the transaction as opposed to the industry’s commonly accepted practices. Context of the transaction is a much more objective test and is designed not to be a fixed list but rather to allow for innovation and growth in what industry can do and what will be appropriate for collection.

“There is consensus around the notion that there needs to be collection limitation, the question is where the boundaries are going to be, but there is sure but slow progress being made in this area.” said Brill.

Finally when asked about the FTC’s role in determining who is an actual data broker, Brill noted that there is a lot the FTC still does not know and that is why they need to hear more from industry. Brill wants to focus on the low hanging fruit and those companies that recognize themselves as data brokers. “Let’s get them to engage in more transparent activities, to have some sort of website or portal where they inform consumers who they are…there’s one place where consumers can go to find them and then consumers can find out about what access and collection rights that entity offers. Then I think we can start to talk about drawing the lines, where the grey areas are and who is on each side of that line.”

Drew Clark, Founder and Publisher of Broadband Breakfast.com then turned the discussion of privacy, social networks and the media over to a panel of industry experts to get their take. The panel of experts included Bruce Gottlieb, General Counsel Atlantic Media Company, Sarah Hudgins, Director of Public Policy at the Interactive Advertising Bureau and Jules Polonetsky, Director and Co Chair of the Future of Privacy Forum.

Gottlieb believes that social networking and media has been a plus for Atlantic because it creates a powerful tool to increase traffic and build a new economic foundation. Small companies can expand rapidly and grow their audiences and revenue. He dismissed the notion that behavioral advertising is bad for publishers of premium content because it takes viewers away from the content.

There are $32 billion in online ad revenue that did not exist 5 years ago, noted Gottlieb, “the issue is that 68% of that pie goes to five players (Google, Yahoo, Facebook …) and that becomes a threat.”

Clark asked Hudgins to go into further detail about how interactive advertising has changed with the advent of search and social.

“Organic search,” explained Hudgins, “still drives a lot of viewers. Just as search was disruptive for publishers, social media will be disruptive for publishers. One constant is that it is still just a new front page. In this instance, one advantage for publishers is the engagement factor – content is still king it is just that engagement is the new queen.”

“Social media now drives users to content and content can become advertising for a brand,” next step noted Hudgins is how you keep them there, and that is where the site’s inventory comes into play.

At the same time, it seems like drivers of ad revenue are becoming more and more complex focusing on, time on the site, unique viewers, and much more. Image and displays, consumer behavior, social engagement, gamification and mobile platforms are all key components of keeping viewers on sites and driving up ad revenue.

Clark moved the discussion towards privacy by asking Polonetsky, about how he views privacy from a consumer standpoint versus a publisher standpoint.

Polonetsky who represents an industry supported think tank believes that people are always looking for the perfect solution to a problem. “Companies are trying to do useful things” said Polonetsky but the ecosystem tend to hold them back. His organization put forward the idea of Do Not Track for behavioral advertisements over an year ago but at that time the industry and ecosystem did not accept that idea. Some people do not want any tracking, on the other hand tracking is essential to return on investment.

Hudgins believes that companies now have to compete based on privacy controls. She suggested that consumers are becoming savvier about privacy settings and therefore transparency when it comes to privacy settings and application data sharing needs is increasingly essential.

Polonetsky was weary about too much choice for consumers when it comes to data collection and privacy. If it is useful for sites to have that information that provides very important data, like when a browser crashes, “Why ask?” he said, “People will say no just for the hell of it.”

People need to understand that there are things that will happen by default that are ok. “Too much choice on micro issues leads to uninformed decisions,” said Polonetsky.

Gottlieb chimed in on a personal note about choices and privacy settings, he would like to make a set of decisions once and have them transfer across all the platforms and devices he works with. “Developing common languages and letting that flow though the technologies would be very useful.”

Moving on to the discussion of data brokers and data aggregators, Hudgins saw a real challenge in drawing the line between the two. While many companies have data about consumers most of it is in aggregated formats. Most of these companies may have no way to parse that data out for consumers in identifiable forms. “The term data brokers can sweep in a lot of companies for practices that may of may not be a big part of what they do.”

Before we start to legislate on privacy, Hudgins believe that we need to wait and see what industry can do. Hudgins also added that she believes the most effective regulator is the media. If there is a change, there is a consumer outcry and the media reporting can create or destroy brand trust.

Gottlieb is skeptical that consumers choose between services based on privacy rather than price and added features. “Privacy is more of a 0 or 1, you don’t notice it till it pisses you off – what pisses you off is what shows up on the front page of the Times.” He believes the bully pulpit has let to more reform than anything else.