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Privacy Invasion Blame Game

Wednesday, 11 May 2011 | 9:57 AM ET

The issue of mobile phone privacy reverberated in the halls of Congress Tuesday when Senator Al Franken (D-Minn), Chairman of the new privacy and technology subcommittee of the Senate Judiciary Committee, heard testimony from both Apple and Google to get the 411 on just how much information has been collected. After the second cyber attack on Sony , I found out from an anti-phishing work group chairman that mobile phone users have far less privacy than many of us thought.

I decided to follow up on the story with Jonathan Zuck, President of the Association for Competitive Technology, which represents many small developers as well as larger companies that make mobile apps.

Zuck testified before the Senate to give app makers a voice in this privacy blame game.

LL: When news came out that Apple and Google had a hidden feature that could silently track their consumers location there was concern. Why would a feature be in its software to begin with?

JZ: One feature is to create a faster, less battery-intensive way of knowing where access or cell towers are. The second feature is faster location response time for your mobile device, enabling you to find your location when you can't connect to a satellite for GPS.

LL: Do the FTC and state law enforcement agencies have the manpower to effectively police the vast range of products that connect to the Internet?

JZ: We could always use more cops on the beat to protect consumers online and off, but we've already seen that the FTC and state AG's can act when necessary. In the hearing, the FTC noted its settlement with Google over the deceptive practices of its Buzz social networking product.

Google must submit to twenty years of independent audits of its privacy conduct. The FTC has authority under Section 5 of the FTC Act which allows them to bring enforcement action against entities that engage in unfair or deceptive acts. The settlement with Google represented the largest enforcement action ever undertaken by the FTC.

LL: Many say we need more regulation. Is it a matter of more regulation, having the manpower to regulate what we already have or a revamp of the regulation since the technology is ever changing?

JZ: There are myriad laws in place to address and consumer protection concerns. Whether it’s fair trade practices or antitrust, there are vehicles in place to address transgressions. Any approach to privacy regulation should be comprehensive and should focus on the data itself, not the means by which it was collected. The technology at question in the hearing has not brought about new questions of consumer privacy. The issue of marketing use of personal data has been around for decades. As we said before, however, manpower can always help.

LL: Are app-makers being painted in a wrong light here?

JZ:I commented at the hearing that our members are contacting me exasperated because they are "doing the time, but they didn't commit the crime." What I meant by that is we have a situation where a couple big companies in the technology sector act irresponsibly in a very prominent way and the public at large reacts with suspicion and distrust of the whole industry.

Recently that company has been Google which has brought us the Wi-Spy scandal, the Buzz fiasco, and the Doodle for Google profiling of schoolchildren. Even more recently Sony lost massive amounts of data.

Eight-five percent of the app developers responsible for the top 500 apps are small businesses and startups. They couldn't get away with the same disinterested attitude toward privacy, even if they wanted to.

In spite of all this, app developers remain the little guys. You will continue to see big companies point the finger at apps developers to distract Congress and the media from their own transgressions. ACT was invited to testify at the Senate hearing to make sure apps developers have a voice in these discussions.

LL: How many jobs are created by the app-makers market?

JZ: It's tough to get an accurate prediction of job creation, so we're planning to study this more closely in the future. However, given the predictions that this market will grow by more than $50 billion over the next four years, back of the envelope calculations suggest we're talking about hundreds of thousands of jobs created in the next few years. This is BIG deal for the economy.

LL: What's the next big thing in apps?

AZ: Perhaps the most amazing use for mobile devices and applications on the horizon is data intensive communication. Innovations in distance learning and distance medicine are just around the corner and promise to make the world a little smaller and accessible to so many more.

The migration from voice to data communication is why spectrum is becoming such an important issue. As data communication innovations reach the market, its essential we have the wireless spectrum to fully realize their potential.

___________________________________________

Questions? Comments? Email us atNetNet@cnbc.com

Follow on Twitter @ twitter.com/loriannlarocco

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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."

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