Privacy Battle Pits Lawmakers Against Tech Companies

The political consensus is forming in Washington around greater regulation of online advertising to protect consumer privacy.

The twin goals are more consumer awareness of behavioral tracking and more “user friendly” opt-out standards, meaning you could more easily restrict websites from tracking information about you, based on your purchases and searches on the Internet.

There’s legislation in the works that would require all websites using tracking technology to get a consumer's consent before using personal information for commercial purposes, such as tailoring ads to web-surfing habits.

Congressman Rick Boucher, (D-Va.), is leading the charge.

“What we’re seeking to do is very fundamental and that is [to] make sure that everyone who uses the Internet and visits websites knows what information is collected about them and then how that information is used,” said Boucher, who is chairman of the Subcommittee on Communications, Technology and Interest.

Boucher and Congressman Cliff Stearns, (R-Fla.), are circulating draft legislation that would prohibit cell phone companies from using information about your geographical location, or race, religious beliefs or sexual orientation, without your consent.

Before the August recess, the powerful chairman of the Senate Committee on Commerce, Science and Transportation, Jay Rockefeller, (D-W.Va.), also sounded the Internet privacy alarm.

“From this profile they determine your tastes and private characteristics,” said Rockefeller. “They inundate you with advertisements based on this information. They can spam and potentially scam you.”

In the first quarter of 2010, online advertising revenues topped $5.9 billion—up 7.5 percent from a year ago. Consumers' “opting out” of being tracked could cut into that bottom line.

• First Story in Series: How Businesses Mine Consumer Data

Naturally, lobbying is heating up. In the second quarter, Google spent $1.34 million on lobbying Washington—a 41 percent increase from a year ago, according toOpen Secrets, a non-partisan group that tracks money's effect on US elections and public policy.

The message to lawmakers is that the multi-billion dollar Internet economy could not exist without advertising and strong privacy safeguards.