Social networking continues to gain popularity and behavioral targeting is increasingly appealing to advertisers and online operators, yet the privacy debate rages on and regulatory threats loom. In this interview, Lydia Parnes, a partner at Wilson Sonsini Goodrich & Rosati and former head of consumer protection at the Federal Trade Commission, discusses the online privacy landscape—self regulation, online advertising, social networking and disengagement.

IAPP: We’ve been hearing for more than a decade that congress will legislate, or the Federal Trade Commission will regulate, online advertising and related information practices. What’s different today? Why should we pay attention now?

Lydia Parnes: The leadership in congress and at the FTC has clearly staked out privacy generally—and online advertising more specifically—as areas for change. Chairman Boucher, a respected and serious law maker, has spent many months exploring a wide array of consumer issues associated with online and offline privacy and considering exactly what proposed legislation should look like. His proposal, which has been announced but not yet introduced, has clearly touched a nerve and generated a groundswell of interest from industry and advocates alike. In part, that’s because of the subject matter: online advertising. And, in part, it may just be that the time has come for privacy legislation. In any event, I’ve been involved in, and following, this issue for the last 15 years, and have never seen this much attention given to a proposed privacy bill.

IAPP: Self-regulatory activities have increased dramatically in the past year. What does this mean for Web site operators, advertisers, advertising networks and the businesses that support them?

Parnes: Last year, then commissioner and now FTC Chairman Jon Leibowitz issued a concurring statement with the release of the FTC Staff Report: Self-Regulatory Principles for Online Behavioral Advertising. Chairman Leibowitz expressed the view that,

“Industry needs to do a better job of meaningful, rigorous self-regulation or it will certainly invite legislation by congress and a more regulatory approach by our commission. Put simply, this could be the last clear chance to show that self regulation can—and will—effectively protect consumers’ privacy in a dynamic online  marketplace.”

Indeed, industry has made significant strides in responding to this challenge. As a former regulator, it seems clear to me that self regulation of online advertising is the best way to serve the interests of both consumers and business. For industry members, understanding the latest developments in self regulation is essential to operating effectively in the marketplace.

IAPP: We consistently hear about privacy concerns surrounding social networking, yet it appears that social networking is more popular than ever. How do you explain this dichotomy?

Parnes: As a society, we’re a social people—we want to establish and keep connections. Yet, at the same time, privacy is a deeply shared value. Social networking sits right at the intersection of these two interests. One result seems to be an increasing reliance on government investigations and private lawsuits to define the boundaries of social networking and privacy.

IAPP: Jim Harper recently said that not engaging in online activities is the ultimate privacy setting. Is that the right answer in today’s world?

Parnes: Although sometimes it’s appealing to go off the grid, withdrawing from our social communities, whether online or elsewhere, can’t really be the answer. We will certainly have to address tough issues in the privacy arena but we’ve done so before, and I’m confident that we can do so here as well.

Lydia Parnes is the program chair of the Online Privacy track at next week’s Practical Privacy Series in Santa Clara, California. Online registration closes June 10, registration will be available onsite.



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