California Introduces Do-Not-Track Bill, May Set U.S. Standard

Mon, Apr 4, 2011 at 12:27 pm

    April 4 (Bloomberg) — A California bill unveiled today that would limit Web companies from tracking the state’s online consumers’ browsing habits may support national efforts for a similar law, costing the industry as much as $1.1 billion annually.

    The legislation would require businesses to “provide a consumer in California with a method to opt out” of the “collection, use and storage” of consumer information, the bill states. It also gives the California Attorney General and the California Office of Privacy Protection the authority to “develop and enforce do-not-track regulations,” according to a press release issued today by Consumer Watchdog, a nonprofit advocacy group.

    The legislation would affect businesses based outside state borders because “if a company is doing business in a particular state, that state has jurisdiction over that business,” said John Simpson, director of the Privacy Project for Consumer Watchdog, which sponsored the bill.

    “Most companies do business in California and Silicon Valley, and the heart of much of the whole Internet is in California,” Simpson said in an interview. “It could have a very, very big impact,” and may lead the U.S. Congress to enact federal legislation.

    A national do-not-track law could cost the fledgling observed-behavior advertising industry, which tracks consumers’ Internet surfing habits, almost 70 percent of its annual sales, according to a Bloomberg Government Study released last month.

    Advertisers use the tracking data to target potential buyers.

    AOL, Microsoft, Google

    The industry includes subsidiaries of AOL Inc., Microsoft Corp., Yahoo! Inc. and Google Inc., as well as smaller companies such as InterCLICK Inc. and ValueClick Inc. Absent a do-not- track option, sales are projected to increase to about $1.7 billion next year from $1.13 billion in 2010, according to online advertising researcher eMarketer.

    InterCLICK fell 8 cents, or 1.2 percent, to $6.70 at 4:00 p.m. New York time in Nasdaq Stock Market trading. The shares had risen 26 percent this year before today. ValueClick rose 90 cents, or 6.3 percent, to $15.30 at 4:00 p.m. New York time in Nasdaq Stock Market trading. The shares had fallen 10 percent this year before today.

    –Editors: Allan Holmes, Anthony Gnoffo

    To contact the reporter on this story: Juliann Francis in Washington at +1-202-654-7379 or [email protected]
    To contact the editor responsible for this story: Allan Holmes at +1-202-654-7377 or [email protected]

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