Antitrust Law Daily Wrap Up, PRIVACY NEWS: Ohlhausen Discusses Privacy, Behavorial Advertising Issues at Marketing and Public Policy Conference, (Jun 3, 2013)

By John W. Arden, J.D., LL.M.

In a keynote address delivered to the Marketing & Public Policy Conference 2013 on May 31, FTC Commissioner Maureen K. Ohlhausen grappled with a major difficulty in attempting to regulate privacy and online behavioral advertising—that is, the dichotomy between what the public says about valuing its privacy versus what the public is willing to do to protect its privacy.

“I have seen many privacy arguments based on studies showing that consumers value their privacy a great deal,” said Ohlhausen. “For instance, TRUSTe’s 2013 consumer confidence index reveals that 89% of U.S. adults worry about their privacy online, 72% of smartphone users are more concerned about their privacy than a year ago, and 81% of smartphone users avoid using apps that they do not believe protect their online privacy.”

“But a recent New York Times article indicates that, despite how much we say we value our privacy, we tend to act inconsistently,” the Commissioner observed. That article described how a behavioral economist used a series of experiments to suggest that policy makers should carefully consider how people actually behave.

In one experiment, shoppers at a mall were offered a $10 discount card plus an extra $2 discount in exchange for their shopping data. Fifty percent of the shoppers declined the extra discount. In a separate experiment, shoppers were offered a $12 discount card and the option to trade it for a $10 card to keep their shopping private. “Ninety percent of those shoppers chose the $12 card, even if it meant giving away their shopping information,” she reported.

Some surveys show that a very high percentage of Americans don’t want to be tracked on the Internet, but other polls show that a very high percentage of Americans want location-based online services that are helpful to them. A recent Zogby Analytics poll indicated that a significant portion of consumers are willing to provide some of their information in exchange for better targeted ads and the availability of free online content.

How can government and industry deal with this conundrum? “For starters, I exhort you to pursue research that could shed light on specific consumer attitudes and preferences regarding privacy choices,” she said. “I am especially interested in consumers’ willingness to share personal information in exchange for online content and functionality, as well as their willingness to pay for different levels of privacy.”

Ohlhausen was particularly interested in how those attitudes and preferences apply throughout various demographics, especially in different age groups. “To put it bluntly, I am concerned that in the areas of technology generally and privacy specifically, it may be a case of older folks who are not comfortable with these developments making rules that apply to young people, who see things differently.”

She was also interested in sound consumer research related to the exercise of privacy choices that can help the market function properly. “For instance, it would be helpful to have empirical evidence regarding consumer perception and understanding of privacy-related disclosures through various devices, screen sizes, and formats, such as icons or text.”

Unfortunately, the Commissioner disclosed that she was unable to offer any funding for these proposals. “What I can offer, however, is our sincere desire to partner with your institutions through a dialogue on these very relevant issues,” she concluded. “I can also offer you the potential satisfaction and even glory that comes with making a significant contribution to consumer welfare.”

Commissioner Ohlhausen’s speech (“Consumer Privacy: Someone May Be Watching You—And That May Not Always Be a Bad Thing”) was presented at the Marketing & Public Policy Conference, held May 30 through June 1, 2013, at the Loews Madison Hotel in Washington, D.C.

Sponsored by the American Marketing Association, the Marketing and Public Policy Conference is a premier national and international event for marketing academics, public policy makers, and marketing practitioners interested in social and public policy.

News: Advertising ConsumerProtection Privacy