FTC says it won't intervene to protect Internet user privacy

WASHINGTON — The Federal Trade Commission indicated Wednesday that it would leave it to data-mining Web companies and Internet marketers to decide how best to protect users' privacy.

"Self-regulation may be the preferable approach for this dynamic marketplace," Lydia Parnes, the director of the commission's Bureau of Consumer Protection, told a Senate committee.

The FTC's decision not to step in — even as Microsoft and Google representatives testified that some regulation would be helpful — means that Washington won't address the matter before a new administration and Congress take office in January.

At issue is what privacy rights consumers have when data-mining companies use their Web browsing patterns to target them for ads. It's a gold mine for online advertising and Internet marketing, but consumer and e-privacy groups say it's intrusive.

NebuAd, a media company based in Redwood City, Calif., has been in the hot seat for partnering with Internet service providers to deliver personalized ads to users' computer screens.

The company's chief executive officer, Bob Dykes, told the Commerce, Science and Transportation Committee that there's no privacy lost in the process.

"NebuAd's systems are designed so that no one, not even the government, can determine the identity of our users," Dykes said.

Leslie Harris, the chief executive for the Center for Democracy and Technology, a Washington-based civil liberties group, said that NebuAd and other data-miners shouldn't be able to track browsing patterns without advance consent from computer users.

She also fears that privacy will be lost as more companies enter the field and their techniques become more sophisticated.

"Self-regulation is a piece, but self-regulation alone is not enough to protect privacy, and we need to have some baseline legislation in place," Harris said.

Microsoft and Google representatives said they supported a privacy protection scheme that included advance consent, encryption of identities and clear notification of what information was being collected.

Federal regulation would be easier for Internet companies to live by than inconsistent state and local regulations.

"There's just this emerging patchwork of federal and state privacy laws," said Michael Hintze, associate general counsel for Microsoft.

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