Internet privacy has been “the next big issue” for more than half a decade. During that time, the Internet has developed into an incredible tool to sell and market our industry, with U.S. retail e-commerce sales totaling $165.4 billion in 2010, a 14.8 percent increase over 2009. In the wake of the voicemail and e-mail hacking scandals in Great Britain this summer, privacy is a hot topic on Capitol Hill.
In July 2011, two subcommittees of the House Energy and Commerce Committee—the Commerce, Manufacturing and Trade Subcommittee and the Communications and Technology Subcommittee—began a series of joint hearings on privacy to “examine how information is collected, protected, and utilized in an increasingly interconnected online ecosystem.”
At the same time, Internet tracking technologies known as “cookies,” “beacons,” “flash cookies,” and even “super cookies” are making headlines in publications such as Newsweek and the Wall Street Journal. A cookie is a bit of information stored on a user’s computer when surfing a website. This information allows the computer to recognize a website faster and provide a better Web experience, but the cookie can also collect browsing habits. This helps websites target advertising to relevant Web users (for instance, a user searching for vacation deals seeing hotel related ads). Privacy advocates and some members of Congress have increasingly expressed a desire to regulate these practices in an effort to protect privacy. A major point of contention is whether these technologies should be blocked by default or left for consumers to opt-out of this agreement.
This debate has led Congress to question whether the patchwork of federal and state privacy laws has kept pace with Internet technology. Washington could issue an entirely new framework of regulations and standards for businesses, which would require a major investment and shift in operating practices. In short, the proposed regulations being introduced in Congress could potentially end the Internet model we see today where information is largely left free and open.
A regulatory model proposed by the Federal Trade Commission is a “Do Not Track” list, similar to the “Do Not Call” list relating to telephones. This proposal advocates up-front disclosures with opt-out opportunities before consumer information is used for behavioral advertising or other uses. This would default the current privacy operating procedure to consumers not receiving targeted ads, which have become extremely valuable in the current market place.
For its part, the Obama Administration has stated a desire for stronger privacy protections while balancing business concerns. During the Sept. 15 House Subcommittee hearing titled “Internet Privacy: The Impact and Burden of EU Regulation,” Nicole Lamb-Hale, assistant secretary of the International Trade Administration, stated that new privacy standards would be used to fill gaps where there currently is no policy. She testified that the Administration is not interested in creating framework that would supersede current law. This suggests that whatever new Internet privacy standards the United States adopts would be different than those currently implemented anywhere else in the world, contrasting with the more restrictive European model.
Hoteliers should be cognizant of how new rules may affect their business and exactly how their organizations are utilizing Internet marketing technologies. From a practical standpoint, we just do not know what is on the horizon in terms of new privacy regulations. Congress can take many different actions (as evidenced by the growing number of privacy related bills), although they are unlikely to maintain the status quo.
At the bare minimum it seems necessary to identify who within the organization is tasked with overseeing these issues, what the official policy is regarding consumer privacy online, and what the protocol or next steps will be as the environment develops. This technology is rapidly evolving and it is prudent to devise an operating strategy that is known throughout the organization.
Moving forward with privacy legislation, there needs to be a balance between consumer protections and the ability for businesses to innovate. As the National Telecommunications and Information Administration Administrator Lawrence Strickling stated during the July Congressional hearing, “Trust is imperative to the sustainability of the Internet. We have to avoid the delay often associated with traditional regulatory processes.”
Ensuring consumer protections in order to maintain public trust of online interactions is paramount—but permitting the ability to innovate is vital to maintain a full and robust online marketplace. The coming year will undoubtedly bring a strong debate from both sides.