Inside Google

A California do-not-track bill squeaked through its first test after what supporters called the country’s first legislative hearing on the subject. The state Senate Judiciary Committee late Tuesday approved SB-761 by Sen. Alan Lowenthal, D-Long Beach, in a 3-2 vote on party lines. “Partisanship applies” when consumer protection and industry interest conflict, Director Beth Givens of the Privacy Rights Clearinghouse told us Wednesday.

“We’re just delighted that it got through the first policy committee,” said John Simpson of Consumer Watchdog, which originated the data-privacy measure. “That’s a big win.” The data-privacy bill goes to the Appropriations Committee with a May 27 deadline for passage and no hearing scheduled, an aide to Lowenthal said.

A ballot initiative always is a possibility if the bill doesn’t get through the Legislature, Simpson said. It’s supported by privacy and other consumer groups, at least if its target is narrowed to third-party marketers.

The bill is opposed by a formidable array of technology, marketing, entertainment and other companies. An April 27 letter to Lowenthal opposing the legislation was sent in the names of AOL, the California Cable &
Telecommunications Association, the California Chamber of Commerce, the Direct Marketing Association, Google, the Internet Advertising Bureau, the Internet Alliance, the MPAA, the National Advertising Initiative, NetChoice, TechAmerica, TechNet, Time Warner Cable, Yahoo and others. We didn’t hear back right away Wednesday from opponents we called: Judiciary’s ranking Republican, a TechNet lobbyist, Google and the Chamber.

The measure is modeled closely on federal HR-654, the Do Not Track Me Online Act, by Rep. Jackie Speier, D-Calif., Simpson said. Where her bill would have the FTC write regulations, the broad-brush state bill would give the corresponding task to California’s attorney general to complete by July 1, 2012, in consultation with the state Office of Privacy Protection. The attorney general is Kamala Harris, a Democrat who supports the bill. The point of the measure is both to enact a California law and to light a fire under Congress and the FTC, which has endorsed do-not-track but not necessarily through government regulation, said Lowenthal’s aide and Simpson. Speier’s bill is “kind of stalled… under the Republican majority in the House,” Simpson said.

“A Do Not Track mechanism would give consumers better control of their information and help restore their confidence in the internet,” Jamie Court, Consumer Watchdog’s president, said in a written statement after the committee action. “That’s a win-win for consumers and business.”

The bill “would create an unnecessary, unenforceable and unconstitutional regulatory burden on Internet commerce,” the opposition letter said. “The bill covers an overly broad range of information, and would regulate indirectly virtually all businesses who collect, use or store information from a website.

The measure would negatively affect consumers who have come

to expect rich content and free services through the Internet, and would make them more vulnerable to security threats. It would prove costly to the state and cumbersome for the Attorney General to figure out how to regulate under the bill and to enforce the law.”

Businesses opposed to the bill “would like to see a little bit more in statute, rather than see everything go through the regulatory process,” Lowenthal’s aide said. “And we’re open to that. … Important details will maybe make it into the statute.” Companies “want to have some market certainty,” without the risk that regulations will change with the identity of the attorney general, she said.

“While we acknowledge privacy concerns about data collection by first-party websites, we believe that these websites do not currently raise the same serious privacy issues as third parties,” the Electronic Frontier Foundation said in a “support if amended” letter, according to the Legislature’s official bill summary. “The rampant, cross-domain, invisible data collection by third-party tracking companies is a grave threat to online consumer privacy. We believe SB 761 should be amended to focus specifically on third parties, ensuring that consumers can easily opt-out of such tracking.” Givens said she agrees. “We would run into more opposition” without the distinction, she said.

But Jeff Chester, the Center for Digital Democracy’s executive director, said “the bill needs to address all tracking. There’s no longer any real distinction between first and third party. Companies like Google and Yahoo are mixing and matching first and third party data on a daily basis.”

“There may be different regulations for first-party versus third-party,” Lowenthal’s aide said:. “It’s too early to tell.” Simpson said regulations probably would make that distinction. Amendments to the bill in March specified that a company that has a continuing business relationship can gather information needed to complete a transaction even on a consumer who has opted against data collection.