Amazon.com Puts Consumers in Control: Melugin in TechCentralStation.com

Published in TechCentralStation.com<?xml:namespace prefix = o ns = “urn:schemas-microsoft-com:office:office” />

September 25, 2000

If you’ve received an email from Amazon.com regarding their new privacy policy, you’re not the only one. Recently, the popular online retailer began contacting its 23 million customers about changes in how their personal information will be handled.

But many advocating federal regulations for online information collection have criticized Amazon.com for the terms of the new policy. To do so is to miss the larger point; the company is going to great lengths to keep customers informed about how their personal information is being managed so that they can make informed decisions about where to shop and with whom to share this data. Those concerned with online privacy should have applauded this effort.

Many of the changes were doubtlessly inspired by the Toysmart.com debacle. The recently bankrupt online retailer attempted to sell its customer list after promising consumers their information would not be shared with third parties and promptly came under fire from the Federal Trade Commission. In order to avoid similar confusion, Amazon.com changed its privacy policy to include provisions for instances where customer information might be transferred to different owners. And instead of passively posting the changes on their site, Amazon went to the trouble of emailing their customers about it.

But in light of the criticism Amazon has received for the move, it seems that those advocating government intervention of information collection on the Internet are more interested in setting the terms of the exchange, than they are in ensuring that consumers are able to decide for themselves with which privacy practices they are comfortable.

The Amazon.com controversy highlights this distinction between efforts to empower regulators and efforts to empower consumers. The new privacy policy explains that visitors to the Amazon.com site will no longer be given the ability to “opt-out” of having information collected about what products they look at or purchase.

Critics have labeled this as a step backward for the privacy of consumers, but denouncing the specifics of the policy implies that the privacy preferences of critics should be everyone’s privacy preferences. It is unlikely that one standard for privacy could appeal to everyone. For example, some consumers appreciate being greeted by name and being shown books or videos on the subjects they’ve shown interest in before while others deem the practice “creepy.”

It’s true that some will prefer to reveal nothing about themselves while online. But it’s also true that in light of Amazon.com’s email effort, these individuals are now in a better position to make a choice that is in accordance with their privacy preferences the next time they want to buy a book. And if enough people object to the policy changes, it’s likely that Amazon.com will want to reconsider its practices. But if not, anonymity aficionados will simply shop elsewhere and Amazon.com will cater only to those who find the new policy agreeable. The point is that consumers should be able to decide for themselves what they are and are not comfortable with because it will surely vary from one online shopper to the next.

By dictating the terms of information exchange online, advocates of online privacy legislation will create “one size fits all” regulations that won’t be able to cater to the varying privacy preferences of consumers. The decentralized marketplace will best be able to take varied consumer preferences into account. For instance, it’s not difficult to imagine an online bookseller making its “we don’t collect any information about our customers” privacy policy into its competitive edge. Similarly, a retailer might collect and sell every tidbit of data about its customers in exchange for a ten percent discount. Rigid regulations would never facilitate this type of variety.

Consumers should remain able to decide how their information is being gathered and used by dealing only with sites that operate in accordance with their preferences. If a site doesn’t post a privacy policy, concerned consumers should avoid it. The role of government should be to hold companies to their policies, but the terms of online information exchange should be left to markets to decide, not to regulators to dictate.