Letter from ITAA President Harris Miller to Commerce Secretary William Daley.
Re: online privacy.
Date: March 3, 2000.
Source: Information Technology Association of America. This page was created by converting an MS Word version into HTML.

March 3, 2000

The Hon. William M. Daley

Office of the Secretary
Room 5854
U.S. Department of Commerce
14th & Constitution Ave. NW
Washington, DC 20230

Dear Mr. Secretary:

As you know, the Internet has grown dramatically as a consumer medium. In 1996 there were under 40 million users connected to the Internet globally.  Projections put the number of online users at nearly 1 billion by 2005.  Small and mid-sized businesses now have the ability to compete on a global scale.  The Internet has changed our lives for the better—and more quickly--than any other technical advance in recent history.  Your Department deserves credit for helping to nurture these benefits.  Now, however, a concern about the business practices of a few firms threatens to upset the democratic model on which the entire Internet is based.

With 26,000 direct and affiliate member companies, the Information Technology Association of America (ITAA) represents the builders of the Internet and e-commerce revolution.  Their products and services, from software and telecommunications to consulting and complex systems, form the technical infrastructure on which all else rests.  Understandably, any steps which may form barriers to the broadest possible access to this infrastructure are viewed by this community with considerable concern.

We believe, as you do, that no one should be left behind in the Internet Economy.  For example, our “Digital Opportunity Initiative,” is aimed at growing and diversifying the information technology workforce by attracting African-Americans, Native-Americans and Hispanic Americans into high paying and exciting information technology jobs.  Moreover, we were interveners in the Federal courts supporting the Federal Communications Commission “schools and libraries” program to wire our nation’s classrooms to the Internet.  ITAA shares the Administration’s commitment to avoiding a “digital divide” in which some in our society become “information have-nots.”

That is why I am especially distressed that the Department of Commerce may be joining with the Federal Trade Commission in offering proposals for far reaching regulation of Internet advertising.  Such regulation could significantly undermine the ability of providers to offer free content and access by encouraging many websites to offer only subscription content and access.  While sensitive to the need to safeguard individual privacy on the ‘net, we also believe that upsetting the Internet business model could have a variety of significantly negative unintended consequences.

• Internet participation could become unaffordable to many middle and low income Americans.  Advertising support of websites and access providers makes the Internet more affordable than it would be with a “pay- per- view” model;  
• Companies no longer attracted by the cost effective “narrow casting” capabilities of the Internet may eventually withdraw from this marketplace, shrinking the medium and its ability to deliver robust content;
• Companies and customers will lose quality and productivity benefits delivered by websites no longer able to customize Internet-based products and services;
• Quality and productivity losses sustained at the consumer level will aggregate to slow the economy as a whole.

The Internet’s growth has sparked renewed attention to consumer privacy.   Numerous consumer surveys and newspaper stories conclude that one of the hurdles to e-commerce is satisfying consumers’ demands for privacy.  A number of recent legislative initiatives have surfaced as well.

Consumer surveys also demonstrate that consumers are carefully weighing the impact on their privacy in participating in this new medium.  We believe that barriers should not be constructed to the ability of Internet companies to offer consumers convenience, nor should we underestimate the capacity of consumers to make informed privacy choices.   The Internet is a highly interactive medium over which consumers exercise considerable control.

ITAA believes that specific concerns about online privacy are being addressed through the following resources:

• Existing regulation

Beyond the restraint that consumers exercise in the use of personally identifiable information, there are numerous state and Federal laws that govern its use.  This includes laws affecting financial, medical and children’s information.   Our privacy laws have generally focused on regulating the use of sensitive information, rather than attempting to dictate how consumer records are maintained.   This American approach of focusing on the areas of greatest concern reflects a careful balancing of consumer interests.   A clear distinction should continue to be drawn between what is “personally identifiable information” and what is “non- personally identifiable information.”

As a broad principle, ITAA cautions against any regulations which would discriminate against online commerce by establishing requirements not faced in the more traditional brick and mortar economy.   Many other studies have linked the productivity gains resulting from the information technology networks as a vital contributor to the long prosperity the country has enjoyed in this decade.

• Technology

Technological solutions will give consumers even greater flexibility to exercise their privacy preferences.  The Platform for Privacy Preferences or “P3P” being developed by the World Wide Web Consortium at the MIT Laboratory for Computer Sciences is new browser technology that would allow consumers to set their privacy preferences online.  The browser would then automatically query online sites to determine whether those preferences are being met.[1]  This is an industry-supported initiative that is seeking to use technology to empower consumers to an even greater extent then they are already.

Similarly the introduction of new computing appliances will change the way consumers access the Internet.  As a result we caution against regulations that assume the continuation of a Personal Computer based technology model.  For example, consumers are likely to access hand held or automotive devices differently than the PC.  Rules intended for PCs could inhibit this innovation.

• Self-regulation

With the Administration’s strong encouragement, as well both regulatory and bipartisan congressional support, ITAA and many of our member companies were active in the formation of the Online Privacy Alliance.[2]  Within a matter of months, we worked out common privacy principles and established privacy practices.

Last spring, an independent survey, the Georgetown Internet Privacy Policy Survey, conducted by Prof. Mary Culnan of the McDonough School of Business, concluded that although 93% of surveyed websites collected personal information, 66% posted privacy policy notices.[3] 

Perhaps even more important in its impact on consumers, 94 percent of the Top 100 most popular Web sites had posted privacy policies to inform consumers about what information was being collected and how it would be used.

This is a dramatic improvement in just one year and confirms that the overwhelming majority of the most heavily trafficked online sites have now adopted and display privacy policies.  Only a year earlier, an FTC survey of commercial web sites had found that only 14% posted any disclosure regarding their information practices.[4]  While more remains to be done, our industry has responded to its self-regulation challenge in “Internet time.”

* * *

While the Internet seems to be rewriting history on an hourly basis, reason tells us that these are still early days.  Naturally, different consumers may require varying degrees of comfort level using this technology.  The reluctance of some consumers to engage in Internet commerce after such a short period should not be seen as a need for regulation.  Internet commerce companies have a strong incentive to address effectively consumer concerns in order to advance online commerce.  Portals, Internet Service Providers, e-commerce sales sites and other Web sites are striving to earn consumer confidence.

An open and supportive legal environment has helped encourage the rapid development of the Internet.  In a strikingly fast period of time, the World Wide Web has transformed competition and fueled dramatic economic growth.  Our economy is on the brink of creating the largest and most vibrant marketplace of goods, services and ideas the world has ever known.

I encourage you to go slow in making any Internet regulation proposals, however well intentioned, which would undermine the flexibility of this dynamic medium.   ITAA, and our member companies, welcome the opportunity to continue a dialog with you about how we can most effectively realize the extraordinary potential of the Internet, preserve its open and democratic nature, and protect the legitimate privacy concerns of consumers.

Sincerely,

Harris N. Miller
President
ITAA

CC:
  Chairman Robert Pitofsky
  Members of the Federal Trade Commission
  Members of Congress
  Peter Swire

Footnotes

[1]  See http://www.w3.org/P3P/

[2]  For more information see, http://www.privacyalliance.org/

[3] This report is available at http://www.msb.edu/faculty/culnamm/gippshome.html.

[4]  Federal Trade Commission, Privacy Online: A Report to Congress, Washington DC June 1998