Threat to online privacy starts with the way the Internet makes money

There’s something quaint about the ruling last week from an appeals court in Indiana concerning an anonymous comment posted on The Indianapolis Star’s website. The 2009 posting suggested a local notable had embezzled money from a troubled project, and he wanted to sue for defamation.

Trouble is, he didn’t know whom to sue because the author of the posting used a make-believe name. The newspaper wouldn’t help because it believed the writer deserved protection as a confidential news source. The court ruled, essentially, that if presented with compelling evidence that the posting was false and damaging, the trial court could order the author identified.

It’s not the wisdom of decision that interests me. It’s the way that courts, when they address the nettlesome question of Internet privacy, do so with care, transparency, and precision.

That’s what is so quaint. Because those same values have almost no role in the way the big, sweeping contours of Internet privacy are taking shape in the new millennium.

Instead, they’re emerging from a corporate-government kabuki that is as transparent as the online Terms of Service Agreements we users thoughtlessly sign: Giant Internet companies introduce glittering services that lubricate the invisible process of appropriating and sharing information about their customers; then, once outraged users get wise to what’s happening, the companies launch new measures to protect privacy; next, those safeguards are exposed as ineffectual, the government gets annoyed, the Internet companies circle back and try again, settlements are reached, checks are written.

And the corporate search goes on, unstoppably, for clever new ways to flush out, capture and make money from user data.

Just this month, Google admitted finding a way to outwit Apple’s privacy settings on iPads and iPhones so it could harvest data from Apple’s customers, and Facebook settled charges it had deceived its users. California reached an agreement on privacy protections with industry heavyweights Amazon, Apple, Google, Hewlett-Packard, Microsoft and Blackberry’s maker.

Those are only the latest in the cascade of privacy-related embarrassments—Facebook’s 2009 Beacon initiative, which told “friends” about user purchases; Google reprimanded in 2010 because its Street View collected passwords and e-mails wirelessly while photographing people’s homes; Apple’s iPhone and Google’s Android transmitting user locations back to their parents; Google exposing user information via its Buzz social networking application.  

An encouraging development was news last week that the Obama administration had come out with voluntary guidelines on online privacy, including a Consumer Privacy Bill of Rights. And an Internet advertiser coalition announced support of “do not track” options, which let users block implantation of cookies–the bits of code that enable their activities to be monitored, recorded and sifted.

Those initiatives were applauded although, as Consumer Reports noted, the guidelines have gaps. They won’t stop all Internet tracking, since “market research” and “product development” are exempted, and enforcement is likely to be haphazard.

But there’s a vastly bigger problem. Any reforms that halted the harvest of personal information that is most nettlesome on privacy grounds would be fundamentally incompatible with the Internet’s essential business model.

Listen up: Surveillance is how the Internet makes a living. All those apparently free services—those drowsy kittens on YouTube, visuals on Google Earth, the vitality of Facebook and Twitter, the overflowing treasure chest of mobile apps—users pay for all that, not with money, but with the information they relinquish about themselves, what they do and whom they do it with, which is used to make money from them.

If “do not track” were widely adopted, it would be as if, a generation ago, people who watched network television could block the ads that came with the shows. The business model on which broadcast TV was based would have been destroyed.

At a minimum, any effective privacy option will come with a price: A sharply reduced level of Internet service—discriminatory access. It’s not talked about, but it is a certainty, just as disabling the cookies now embedded in your browser reduces your ability to see what’s on the sites you visit.

The battle over Internet privacy won’t be won through hollow, if alluring, formulations that ignore the need to re-examine the realities of Internet economics–which make no provision for people to pay for services other than by letting strangers put their lives under a microscope.

The careful steps the Indiana court mandated to keep the online commentator from being identified to the angry subject of that posting are ironic in view of the near-certainty that the unnamed poster was known to dozens, if not hundreds, of online information providers.


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