"Did we pronounce privacy dead this week?" asked a recent CNET headline, capturing the frenzy that now surrounds the Internet and privacy. Both the House and Senate in recent weeks have held combative hearings on the subject.
These overblown concerns are hardly new. Photography, the telephone, radio and television have all been cast as harbingers of privacy doom. "Privacy, in the year 1931," said a New York Times Magazine essay that year, "belongs on the museum shelf with the sorrowful relics of early Indian pottery and the statuary of the Greeks."
Despite these ominous warnings, consumers continue to flock to new technologies in droves, weighing for themselves the trade-off between their enormous technological benefits versus some possible loss of privacy.
The latest front in the privacy debate concerns targeted advertising. Many websites install "cookies" on users' computers that can track browsing behavior both on that website and across the Internet. Websites select which ads to display based on the gleaned data. This targeted advertising is 2.5 times more effective than traditional mass advertising in directing consumers to products they want, according to a study by George Washington University professor Howard Beales.
The Wall Street Journal, in its ongoing "What They Know" series, chronicles internal debates at Google and Microsoft over default privacy settings. Google dithered for years about embedding cookies in its advertisements. Microsoft, similarly, debated whether to disable cookies by default in Internet Explorer 8. Ultimately, both companies internally compromised by enabling tracking cookies, but also give users the choice to opt out.
Such compromises might not make everybody happy, but no other single approach could, either.
A body of research reveals a sizable disparity between how much people say they value privacy and how willing they are to actually protect it. In a 2003 Duke Law Journal article, Michael Staten and Fred Cate found that fewer than 10 percent of users exercise their right to opt out and share less. Conversely, if given the opposite choice, fewer than 10 percent of users elect to opt in and share more. The vast middle is apparently indifferent.
If consumers were required to affirmatively opt in before sharing data, the Internet's prevailing advertising-based business model would be decimated. The effectiveness of online advertising in Europe, for example, fell 65 percent after the European Union in 2002 required a blanket opt-in system. For more than a decade, the Internet has thrived on the assumption that most people believe it is a fair trade to receive free content in exchange for viewing ads. Mere advertisements shouldn't be equated with gross privacy violations.
Consumers wary of ubiquitous data collection should have the ability to opt out. This is similar to the solution proposed by the Federal Trade Commission and already made possible by the leading Web browsers -- Internet Explorer, Firefox and Chrome. In designing their systems, companies must continue to consider consumers' preferences and improve their privacy services. In the long run, consumer demand, not legislative intervention, will most effectively calibrate privacy and advertising. Microsoft's and Google's internal debates show that balancing process in action
Today, as in the past, rumors of privacy's death have been greatly exaggerated. Fifteenth-century intellectuals feared that Gutenberg would destroy privacy as they knew it; instead, his printing press sparked the Enlightenment.
The 21st century's transformative information age is in its infancy. Let's not suffocate the Internet because peripheral privacy activists are spooked by cookies. Time after time, those technological "things that go 'bump!' in the night" actually come bearing gifts.