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FTC Recommends Do-Not-Track System
Volume 770
December 7, 2010

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Advocating for greater Internet privacy rights, the Federal Trade Commission (FTC) has endorsed a plan that would let consumers block companies from monitoring their online browsing and buying behavior. The proposed system, which is drawing comparisons to the national do-not-call registry, could significantly affect technology companies that make money from Internet ads tailored to online consumer habits. "Despite some good actors, self-regulation of privacy has not worked adequately and is not working adequately for American consumers," said Jon Leibowitz, FTC chairman. "We'd like to see companies work a lot faster to make consumer choice easier."

The suggested do-not-track mechanism, which could be built into an Internet browser, would essentially signal to a website that the user doesn't want to be monitored or receive tailored ads. A consumer that uses the mechanism would still see advertisements, but those ads would likely only be reflective of the webpage that's being viewed. Currently, Internet users who want to block pattern-based tracking have to adjust browser controls or click on icons near ads that open separate webpages offering opt-out functions.

As part of its review, the FTC will seek comment on its proposal for the next two months and will then evaluate the effects of the mechanism on consumers and advertisers. Analysts say tech giants like Yahoo, Google and Microsoft would all be affected differently because of the varying ways they use data collection to generate revenue. Advertisers who oppose the mechanism argue most consumers would choose to block monitoring, failing to see the benefits of targeted marketing. In general, marketers are willing to pay more for ads that can be delivered directly to a specific demographic.

The FTC's proposal comes during a time in which Internet advertising spending continues to easily outpace all other media spending. According to research firm eMarketer, online ad spending will increase 10.5% in 2011 and reach $440.5 billion annually by 2014. In its analysis, the Interactive Advertising Bureau found that in 2009, 80% or more of digital advertising campaigns used behavioral targeting. 

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