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FTC Warns of Impending Government Regulation of Web Ad Industry

There are many signs that point to official government intervention in the online ad industry.

As the Federal Trade Commission, Federal legislators and state agencies heighten interest in how marketers use consumer data, it's clear the industry is running out of time to establish a self-policing regime. "We sounded the clear call for self-regulators," said Eileen Harrington, Deputy Director of the Bureau of Consumer Protection for the FTC. That clear call was a set of self-regulatory guidelines put forth by the FTC late last year. Either firms involved with behavioral targeting provide clear notice to Web users about data collection, she continued, "Or it's going to get done." In other words, if the industry doesn't start enforcing guidelines for behavioral targeting -- including providing clear, concise and prominent statements about online data collection for advertising -- the government will step in to ensure enforcement occurs. "This is a very juicy policy issue in Washington," said Harrington. The longer the debate goes on, she suggested, "the more likely policies are going to develop." Harrington described the back-and-forth between government and industry entities as "a game of chicken."

Legislators have shown increasing interest in the online ad industry, including the privacy implications of behavioral targeting. During a hearing held in July by the Senate Committee on Commerce, Science and Transportation titled "Privacy Implications of Online Advertising," Democratic Senator Byron Dorgan told industry representatives from Google, Microsoft, Facebook and ISP ad targeting firm NebuAd, "The FTC might need to go further and ensure enforcement of any guidelines." The House of Representatives has been poking around, too. The House Energy and Commerce Subcommittee sent requests for information to a slew of ISPs, along with some of the Web's largest ad players: AOL, Google, Microsoft, and Yahoo. The goal was to determine which companies engage in behavioral targeting practices and how those activities affect consumers. Most of the ISPs responded that they don't engage in such ad targeting practices. Speaking at the OMMA Conference in New York Friday, Harrington said the FTC and legislators are not satisfied with the information they've gleaned from industry participants. "The facts are obscured," she said, noting the only thing policy and lawmakers want to know is what consumer information is being collected online. "They haven't been forthcoming much at all" in any meaningful way, added Harrington.