Business Report

High Stakes in Internet Tracking

Will “Do Not Track” kill off innovation along with targeted advertising?

An Amazon ad for a book by science fiction writer Cory Doctorow recently appeared on my computer screen. “What a coincidence!” I thought naively. I’d been reading an opinion item by Doctorow on Internet privacy (to be published this week as part of this month’s Business Impact series) and had looked up his past writing. That was all it took for a crowd of ads to start following me.

The business story of our age—the biggest story of any kind, arguably—is how the Internet connects us. Part of being connected via technology is having an identity. It used to be a phone number. On the network, it’s an IP address or the browser cookies that tell other computers who you are. 

The problem today is that anyone can use these tools to track you. Gary Kovacs, CEO of Mozilla, recently demonstrated Collusion, an add-on to the company’s Firefox Web browser that lets you see who those anyones are. Kovacs says a who-knows-who of 150 entities was tracking his activity after one day of Web surfing. This crowd of hucksters and ad networks was following his nine-year-old daughter, too.

Some people think tracking is creepy. Kovacs is one of them. He says that when we go on the Internet, we are like Hansel and Gretel leaving information breadcrumbs—birthdays, financial histories, relationship statuses—“everywhere we travel through the digital woods.”

It’s a scary story, but what are we really worried about? In our age of satellite imagery and Street View and data mash-ups, knowledge is getting more and more granular. It’s becoming harder to be private, to be “secluded” in the most literal sense of that word. There’s now a gathering movement to give people a choice. Earlier this year President Barack Obama endorsed “Do Not Track,” a browser technology that would limit tracking and potentially block ads like Amazon’s that target you based on your past Web surfing.

Such ads are a multibillion-dollar business. All the same, Microsoft’s chief privacy officer says the forthcoming Internet Explorer 10 will be the first browser to have “Do Not Track” turned on by default. For Microsoft, trust is the greater competitive advantage.

Before you cheer, you might ask if there is any real harm in commercial tracking. Despite the hand-wringing, it’s not so easy to find people who have been hurt by the collection of their personal data. Just ask the trial lawyers who have been bringing a ballooning number of privacy suits. At first, courts rebuffed their class-action claims; they could not show “injury in fact.” 

Recently, regulators have taken a more expansive view. The Federal Trade Commission now says privacy-related harms needn’t be economic or physical but can also include practices that “unexpectedly reveal previously private information” like purchasing habits. That is opening the legal floodgates. Facebook faces a class-action suit that alleges it violated wiretap laws and seeks damages of $15 billion—about what the company raised in its IPO. The National Law Review calculates that Google could owe $800 billion in fines to the government for circumventing Safari’s privacy settings.

Now that lawyers are involved, you’d be right to wonder if some useful enterprise is in the crosshairs. The answer, for some, is yes—and that enterprise is innovation. For instance, a 12-person Data Science Team at Facebook is sitting on the largest trove of data ever collected on human behavior. This could yield “something big”—even if no one yet knows what.

It will definitely result in more targeted ads. But so what? Advertisers aren’t much listened to in this debate. The fact is, if you phrase the question right, many consumers will admit they actually want targeted ads.

Now that I think about it, I might just buy that Doctorow book. Thanks for the connection, Amazon.

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The Value of Privacy

Internet advertising is the global $70 billion business that powers services like Google and Facebook. But has tracking of Web users gone too far?

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