Privacy

[Steve]

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Exploiting - and Protecting - Personal Information

Denise Caruso
NY Times 3/1/99


For the last few weeks, the data privacy battle has been waged with
such fury that privacy advocates have not known whether to cry,
cheer or simply assume the fetal position. 

Personal privacy -- the disposition of all those pieces of
information that computers hold about each of us -- has been debated
in the electronic world for almost two decades. Although the issues
are complex, the bottom lines have always been pretty clearly drawn.

People and companies that sell personal data want to be able to
collect and distribute it pretty much with abandon, and they fight
like cornered weasels at even the suggestion of government
regulation. 

Yet, most people online -- 87 percent in a 1997 Georgia Tech survey
-- want "complete control" over their personal data. And if they
feel violated by data collectors, they often scream bloody murder. 

In 1991, for example, Lotus Corp. was forced to cancel shipments of
Marketplace, a CD-ROM data base, after receiving thousands of angry
e-pistles from people who took grievous offense at the data base's
content: the names, addresses, income levels, numbers of children
and other data for every household in the United States. 

More recently, privacy advocates wrested a partial victory from
Intel Corp., after the company announced that its new Pentium III
chips contained embedded electronic serial numbers for authenticating
documents, e-mail and copyrighted material. Watchdogs warned that
the numbers could be used to identify a computer to prying software,
or to allow companies or agencies to track a person's movements
across the Internet. 

Intel refused to remove the number, but agreed to provide software
that allows computer makers to hide it behind a digital fig leaf. 

And the California Legislature, often a bellwether for technology
issues, is considering more than a dozen privacy laws, including one
that would restrict the collection and disclosure of personal
information by government, business or nonprofit organizations. It
specifically includes information gathered via Internet sites. 

Still, plenty of others are rushing to cash in on the data gold
rush.

Privacy advocates were extremely cranky after discovering that
Florida, South Carolina and Colorado were selling residents'
driver's license information to a New Hampshire-based company, Image
Data LLC.

They were even more outraged to discover that the Secret Service had
financed another private company's efforts to develop a national
data base of driver's license photographs. 

And in the most telling testament yet to the commercial value of
personal data in the Internet economy, a start-up called Free PC
announced that it would provide a free Internet connection and a
free Compaq computer to anyone willing to "apply" by answering a
detailed questionnaire and then accepting constant bombardment by
advertisers based on the personal profile created from the
questionnaire. 

Rich Le Furgy, chairman of the Internet Advertising Bureau, an
industry group, said that advertisers haven't even begun to tap the
Internet's potential. They are now investigating how to aim
promotions at individual consumers based on their online behavior:
Vendors want to co-market products in much the same way that
convenience stores did after discovering, for example, that people
who buy beer often buy diapers at the same time. 

That is not exactly music to the ears of a privacy-sensitive
consumer. Obviously, online advertising organizations find
themselves straddling a very pointy fence between companies that pay
for advertising and customers who are subjected to that advertising.
The constituencies have very different viewpoints, and finding a
solution palatable to both is not a task for the squeamish. 

For example, Le Furgy said, "it would be a beautiful thing" for
consumers to control their personal data -- especially if it meant
avoiding legislation and regulation. 

"Privacy is an enabler of commerce," he said. If consumers can get
money for their personal information and still control it, "they'll
be much more willing to provide it." 

In fact, a new breed of Internet company is already making a
business of that concept. 

These companies, known as infomediaries -- a term coined by John
Hagel, co-author of "Net Worth: Shaping Markets When Customers Make
the Rules" (Harvard Business School Press, 1999) -- will step in and
help consumers regain control of their personal data. 

For a price, of course. 

A recent Wired News feature predicts that a coming pack of these
entrepreneurs will "cut the consumer in" on the deal when information
about them is bought and sold. Infomediaries keep a percentage for
themselves for providing the security mechanisms by which consumers
can control exactly who buys their personal data and for what
purpose. 

But some privacy advocates would eliminate even the infomediary and
pass laws granting consumers not just civil rights to their privacy,
but property rights to their private data, ending the free-market
eminent domain that data marketers have exploited for decades. 

Citing a Virginia law that forbids the use of anyone's name or
likeness without permission, Ram Avrahami unsuccessfully sued U.S.
News & World Report in 1996 for selling his name to another magazine.
At the time, Avrahami's opponents ridiculed him for suing over 8
cents, which is what the magazine had paid for his name. 

"The point is this: It's 8 cents for me, for you, for 100 million
other Americans, which becomes big money," said Avrahami, who has
since become a leading advocate of private data ownership. "Think of
it this way: Free PC proves that our personal information is worth
hundreds of dollars. Now, who should get those dollars, if not us?" 

Copyright 1999 The New York Times Company 







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