February 20, 2018

California to Consider Do Not Track Legislation

This afternoon the CA Senate Judiciary Committee had a brief time for proponents and opponents of SB 761 to speak about CA’s Do Not Track legislation. In general, the usual people said the usual things, with a few surprises along the way.

Surprise 1: repeated discussion of privacy as a Constitutional right. For those of us accustomed to privacy at the federal level, it was a good reminder that CA is a little different.

Surprise 2: TechNet compared limits on Internet tracking to Texas banning oil drilling, and claimed DNT is “not necessary” so legislation would be “particularly bad.” Is Kleiner still heavily involved in the post-Wade TechNet?

Surprise 3: the Chamber of Commerce estimated that DNT legislation would cost $4 billion dollars in California, extrapolated from an MIT/Toronto study in the EU. Presumably they mean Goldfarb & Tucker’s Privacy Regulation and Online Advertising, which is in my queue to read. Comments on donottrack.us raise concerns. Assuming even a generous opt-out rate of 5% of CA Internet users, $4B sounds high based on other estimates of value of entire clickstream data for $5/month. I look forward to reading their paper, and to learning the Chamber’s methods of estimating CA based on Europe.

Surprise 4: hearing about the problems of a chilling effect — for job growth, not for online use due to privacy concerns. Similarly, hearing frustrations about a text that says something “might” or “may” happen, with no idea what will actually transpire — about the text of the bill, not about the text of privacy policies.

On a 3 to 2 vote, they sent the bill to the next phase: the Appropriations Committee. Today’s vote was an interesting start.

Comments

  1. The claim that there would be a $4B cost associated with do-not-track seems to me to rest on some of the same kinds of assumptions as the claims of billions of dollars in lost revenues due to unlawful copying. The effect of opt-out is (rather like the do-not-call list) to allow people who don’t want certain kinds of targeted marketing directed at them to avoid that marketing. But at the same time it means that advertisers and marketers will be expending less of their effort on people for whom their attentions are not merely futile but actively unwanted. Instead, they will be spending their resources on people who want to be the subjects of targeted marketing, or at least are not strongly opposed to it.

    It seems odd that it should take legislation to make companies stop putting their money in trash barrels and burning it.

  2. aleecia says:

    @rp – While that is my current belief too, I have seen no good data either way. A solid behavioral study to find out would help a lot. I would like something beyond self-reported behavior via surveys, which are ideal for some topics but do not address this one.

    My guess is that even people who say they do not want targeted ads probably do respond to them slightly in practice, but at a substantially lower rate than the rest of the online population. I doubt it is wholesale burning of money, but it may produce a low enough return on investment to either (a) not be profitable despite a few rare sales or (b) not be a good use of advertising funds that could be more profitably directed elsewhere. And the answer to that has to be case-by-case, dependent on profit margins. I would expect such a data-driven industry to have factions eager to let weak targets opt out, and factions all for never letting go of any possibility of a sale, with different profit incentives playing out. It seems odd that we do not see that sort of split.

    In any case, I see increasing evidence that advertisers are poisoning the well by not listening to privacy concerns. Who buys from spam messages any more? Potential buyers cannot trust the interaction will go well. As data collection becomes widely understood, online ads may get treated the same way. That would be a shame all around.

    • @aleecia — the more cynical among us would note that (as we’ve seen with spammers who sometimes use deceptive tactics to sign up new clients) the job of ad-targeting companies is to sell targeted ads. If that helps their clients sell product, well and good, but that’s just a means to the end.

      In a perfect marketplace, ad companies’ clients would have complete access to all the numbers needed to determine what kind of advertising — and to whom — was most cost-effective, and marketing executives at those companies would make their decisions based entirely on cost-effectiveness rather than, say whatever buzzwords their bosses had just heard, or personal perks and inducements offered by the ad companies. But if anyone’s numbers showed unpleasant results, they’d fight to avoid releasing them, or spin them thoroughly.

      (This actually is an argument for more tracking — not so much for targeting as for evaluation. The one number people always have is clickthrough, but that number is useless without information about what previous ads a customer has seen and in what context.)