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Misguided Privacy Legislation Threatens Digital Commerce, Innovation

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Misguided Privacy Legislation Threatens Digital Commerce, Innovation

Privacy Challenges Best Resolved Through Competitive Outcomes, not Federal Regulations

Reps. Rick Boucher (D-VA) and Cliff Stearns (R-FL) today unveiled draft legislation aimed at improving online privacy that would impose new rules on companies that collect individual data on the Internet. But technology analysts at the Competitive Enterprise Institute warned that the proposed bill would actually harm consumers and hinder the evolution of online commerce.

Washington, D.C., May 4, 2010 - Reps. Rick Boucher (D-VA) and Cliff Stearns (R-Fla.) today unveiled draft legislation aimed at improving online privacy that would impose new rules on companies that collect individual data on the Internet. But technology analysts at the Competitive Enterprise Institute warned that the proposed bill would actually harm consumers and hinder the evolution of online commerce.

“Substituting federal regulations for competitive outcomes in the online privacy arena interferes with evolution of the very kind of authentication and anonymity technologies we urgently need as the digital era evolves,” argued Wayne Crews, Vice President for Policy.

“Today, businesses increasingly compete in the development of technologies that enhance our privacy and security, even as we share information that helps them sell us the things we want. This seeming tension between the goals of sharing information and keeping it private is not a contradiction – it’s the natural outgrowth of the fact that privacy is a complex relationship, not a ‘thing’ for governments to specify for anyone beforehand,” Crews stated.

“This legislation flips the proper definition of privacy on its head, wrongly presuming that individuals deserve a fundamental right to control information they’ve voluntarily disclosed to others online. But in the digital world, information collection and retention is the norm, not the exception. Privacy rights, where they exist, arise from voluntary privacy policies. The proper role of government is to enforce these policies, not dictate them in advance,” argued Ryan Radia, Associate Director of Technology Studies.

“If Rep. Boucher wants to strengthen consumer privacy in the online world, he should turn his focus to constraining government data collection, which poses a far greater privacy threat than private sector data collection. A good starting point would be reexamining the Electronic Communications Privacy Act, the outdated 1986 law that governs governmental access to private communications stored online. Strengthening these privacy safeguards, as a broad coalition of companies and activist groups are now urging, will empower firms to offer stronger privacy assurances to concerned users,” Radia stated.

CEI is a nonprofit, nonpartisan public interest group that studies the intersection of regulation, risk, and markets. For more information about CEI, please visit our website, www.cei.org.