Google, Microsoft Testify About Privacy, Behavioral AdvertisingGoogle, Microsoft Testify About Privacy, Behavioral Advertising

U.S. Senators want to know just how much companies are monitoring people's online behavior in an effort to target advertisements for Internet users.

Representatives from Google, Microsoft, NebuAd, and the Federal Trade Commission testified on the matter during a hearing Wednesday before the Senate Committee on Commerce, Science and Transportation.

Members of the Senate are trying to determine whether current practices jeopardize Internet users' privacy, whether older communications and privacy laws make some behavioral advertising practices illegal, and whether new laws or self-regulation are needed.

The FTC has released draft guidelines on behavioral advertising and its leaders have generally favored self-regulation. FTC Bureau of Consumer Protection Director Lydia Parnes testified during the hearing said she was not sure when final guidelines would be completed.

The FTC and several Senators said Internet users should know when their behavior is tracked and they should have the opportunity to opt-out of online data collection. They should also be required to consent to sharing of health, financial, or other sensitive personal information, Parnes said.

The Center for Democracy & Technology has reported that current practices related to behavioral advertising may violate existing federal laws protecting communications privacy and prohibiting wiretapping by private companies. U.S. Sen. Byron Dorgan's questions during Wednesday's hearing reflected those concerns.

NebuAd Chairman Robert Dykes said that tracking online behavior is different because his company doesn't collect or share information that identifies users.

Google privacy lawyer Jane Horvath said the Internet search giant backs the FTC's efforts to create privacy guidelines, as well as efforts to create a federal privacy law to address online data privacy. She also said that private and public entities should work together to better educate consumers about how their information is collected and used.

Michael Hintze, associate general counsel for Microsoft, stressed the need for transparency, consumer control, and security.

"Consumers must trust that their privacy will be protected," he said. "If the Internet industry fails to meet that standard, consumers will make less use of online technologies, which will hurt them and industry alike."

He said that distrust could damage the U.S. economy, which benefitted from $136.4 million in e-commerce sales last year. That's up 19% from 2006, according to Census Bureau figures that Hintze cited.

"In comparison, total retail sales in 2007 increased only 4% from 2006," he said. "If consumers feel that Internet companies are not protecting their privacy, the Internet's ability to serve as an engine of economic growth will be threatened. This means that Microsoft, and all companies operating online, must adopt robust privacy practices that build trust with consumers."

Internet service providers declined invitations to speak and at least one committee member voiced plans for another hearing focusing specifically how ISPs track, store, and share information about their subscribers.