Internet Privacy: cookies as a weapon

By Scott Bradner

In November 2009 the European Parliament approved a directive on Internet privacy that, among other things, required user opt-in before websites could install cookies on the user's computer. (http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2009:337:0011:0036:En:PDF) In theory, any US company running a web site that may be used by any citizen of any European Union (EU) country would have to follow the rules or risk being brought up on charges by a EU country. Since then many of the European Union member states have passed legislation implementing the directive but the specific requirement for cookie opt-in has remained confusing.

The Justice Department of the European Commission has been trying to figure out just what might constitute opt-in in the context of the directive. The primary group working in the issue has been the Article 29 Working Party. (http://ec.europa.eu/justice/data-protection/article-29/index_en.htm) Members of the working party recently met with European advertisers, who would like to use more of an opt-out approach by maintaining that users who agree to visit a website are, by their action, opting-in to the website's practices. (http://ec.europa.eu/justice/data-protection/article-29/press-material/press-release/art29_press_material/20110914_press_release_oba_industry_final_en.pdf). The working party seems to disagree and wants instead a clear opt-in process. This could be more than a little disruptive if implemented - imagine a pop up window asking if it is OK to store a cookie for each of the sites that wanted to put a cookie on your machine when you went to one website -for example, nine different companies store cookies on your computer when you connect to the New York Times home page, the same number as do for the Network World homepage.

The US has mostly met the requirements of the EU privacy rules by implementing the Safe Harbor framework. (http://export.gov/safeharbor/) US companies can self-certify that they meet the EU rules when dealing with EU customers (but do not need to provide similar protections for US customers. Some 3,000 companies have self-certified, but many have not kept up to date on the certification. The frameworks will need to be updated when the cookie rules have been finalized. In any case the Safe Harbor is a good way to cover your but if you are doing business in Europe or with European customers.

One thing that the Safe Harbor makes clear is that the US does not have any meaningful privacy protection laws when it comes to the data that Internet companies collect about all of us. The Federal Trade Commission has been looking into the issue and has asked for responses to a bunch of questions in this field. (http://www.ntia.doc.gov/files/ntia/publications/fr_iptfprivacy_requestforcomments_12212010.pdf) The are collecting comments at http://www.ntia.doc.gov/federal-register-notices/2010/information-privacy-and-innovation-internet-economy-notice)

Congress, as one might expect, is looking at the issue as one of personal freedom for advertisers rather than anything to do with the privacy of Internet users. The Subcommittee on Commerce, Manufacturing and Trade of the House Energy and Commerce Committee recently held a hearing on "Internet Privacy: The Impact and Burden of EU Regulation." (http://energycommerce.house.gov/hearings/hearingdetail.aspx?NewsID=8905) The hearing was just a bit one sided. One of the committee members (Olson R-TX) said he wanted to "use today's hearings to look at how the EU's overly burdensome privacy laws have negatively affected the European Union economy Only one of the witnesses (Peter Swire of Ohio State University) had anything even neutral to say about the EU rules. The tone was set by Representative Stearns (R-FL) asked the witnesses " is there a demonstrated harm to consumers for being tracked online for behavioral advertizing?" I guess all must be OK unless someone can prove they have been hurt by their personal data wandering all over the country. As you might predict, the witness representing the Consumer Data Industry Association" invoked protecting against terrorists and child abusers as rational for the ad industry being able to collect any information they can.

The subcommittee seemed to be operating on the premise that complaining about the EU rules will make them go away. That does not seem to be all that likely to me. I suggest that anyone dealing in Internet commerce take a look at the Safe Harbor and keep an eye the work of the Article 29 Working Party.

disclaimer: Wishing things away by complaining may be a common reaction of students to pending exams but Harvard has provided no opinion on the current or pending EU rules so the above observation (and lament) is mine alone.