NEWS12 June 2009

Privacy laws could ‘cost US economy billions’

Government North America Privacy

US— The Interactive Advertising Bureau (IAB) has warned US lawmakers that new online privacy laws risk damaging a sector of the economy that contributes $300bn.

Representatives of the IAB, together with dozens of web publishers, have been in Washington DC this week to try to persuade legislators that new laws to control behavioural targeting could harm the online economy.

The IAB’s chief executive Randall Rothenberg has joined others including the MRA in warning that poorly drafted laws with loose definitions of behavioural targeting could cause all kinds of online advertising and data collection to be restricted by rules intended to protect people from privacy threats.

The new study commissioned by the bureau says advertising has “substantially reduced what consumers have to pay for access to the internet and for e-commerce products and services”. It highlights the economic and social importance of the ad-supported internet, claiming it is responsible for $300bn of economic activity in the US, representing 2.1% of the country’s GDP.

It was produced for the IAB by professors from Harvard Business School together with marketing and strategy firm Hamilton Consultants.

The authors write: “The first contribution of this report is to demonstrate just how important internet advertising – construed broadly as all those activities that help firms to find and keep customers – is to the maintenance of the internet and, by extension, to the operation of the United States economy.”

Congressman Rick Boucher, who chairs the House subcommittee on communications, technology and the internet, has said that legislation to protect online privacy in the face of ad targeting technologies could be introduced later this year. Boucher’s predecessor Ed Markey also raised concerns about procedures used by website owners and ad networks to inform internet users that their activity is being tracked, and allowing them to opt out.

The Senate has held hearings examining behavioural targeting technology and its privacy implications.