On the same day they cleared Google Inc.'s purchase of online advertiser DoubleClick, federal regulators said industry needs to be more transparent about how consumers' Web-surfing habits are tracked.
The Federal Trade Commission on Thursday proposed guidelines by which advertisers would voluntarily fess up to Web surfers about whether their online behaviors are monitored and used to personalize ads. Privacy experts said the guidelines could be helpful, but only if industry enforces them.
Consumers are largely in the dark about companies tracking them through these ads, the agency said, adding that companies should give people a realistic choice in whether they want to be tracked or not.
"You shouldn't have to be a computer geek to protect your privacy," said Peter Swire, an Ohio State University law professor and senior fellow at the Center for American Progress, a liberal think tank.
Also on Thursday the FTC approved Google Inc.'s proposed $3.1 billion acquisition of DoubleClick Inc., a combination whose fate awaits a ruling from European regulators.
Swire said the Google-DoubleClick deal shined a "big spotlight" on the online ad industry and on privacy issues that will hopefully spur companies to figure out how privacy fits into their business.
But if they ignore it, Swire added, the FTC and Congress will likely put more pressure on the industry or propose new rules.
Lawmakers have held hearings on the Google deal and have also asked the company for more information about its profiling practices and technology.
Ari Schwartz, deputy director with the Washington-based privacy group Center for Democracy and Technology, said the FTC recognized the industry wasn't doing a good job of regulating itself.
He said the Network Advertising Initiative, the online advertising industry's trade group formed more than seven years ago to address such consumer concerns, has largely been ineffective in that time.
"We think the FTC picked up on some of that and issued their own set of principles," said Schwartz. "And one of the interesting things here is you don't hear the NAI mentioned."
However, Trevor Hughes, executive director for the York, Maine-based NAI that counts DoubleClick, Yahoo Inc., Time Warner Inc.'s AOL LLC and Microsoft Corp. as members, said the trade group has been active and is currently working on a revised set of principles to address the growth in behavioral advertising.
"We take the FTC report as a strong navigational indicator as to where self regulation should be looking as to some of these newer concerns," he said.
He said the group is currently addressing use of sensitive consumer data, such as medical information and children's online activities, for targeted ads — which is one of FTC's proposed guidelines.
Other FTC guidelines, such as data security and retention for business and law enforcement purposes, will be looked at more thoroughly by the group, he said.
"It's notable that the FTC doesn't reject self-regulation and doesn't propose regulation here," Hughes added.
The FTC is seeking public input about the guidelines. Comments can be e-mailed to BehavioralMarketingPrinciples@ftc.gov. by Feb. 22.