Privacy: Can It Ever Be Protected on the Internet?

Eric Goldman

General Counsel, Epinions, Inc.

(speaking for himself, not Epinions)



1.                  Do People Care About Privacy?


        Surveys usually say people do, butÖ

        People ďsellĒ their contact info relatively cheaply

-         Sweepstakes / email newsletters / loyalty programs

-         Street value: $0.50 - $2.00 per person?

        People donít read privacy policies

        Low adoption of privacy technology controls

-         Cookies

-         Anonymizer / remailers

-         Email filters

        People respond to targeted ads/offers


2.                  Why Donít People Do More to Manifest their Privacy Concerns?


        Privacy control benefits v. transaction costs

-         Itís time-consuming to read a privacy policy

-         Itís even more time-consuming to keep up with policy changes

-         Transaction costs of opting-out

-         Hassle factor of using technology controls

-         People want services/benefits/relevant info


3.                  Is Regulation Needed?


        Does transaction cost diffuseness leads to market failure that can be cured only by regulation?

        But, user segmentation of how much users care about privacy

        Why protect the people who care?


4.†††††††† Regulatory Failures


        COPPA (verifiable parental consent)

-         It was already tough to make money from kids

-         Compliance costs were high

-         Many businesses stopped catering to kids or stopped collecting age information

        Graham-Leach-Bliley (mandatory disclosures by financial institutions)

-         Transaction costs of disclosure

-         Privacy disclosures too long and complex

-         But disclosures uniformly said donít expect privacy

-         Transaction costs of opting-out


5.                  Conclusions


        Only a small portion of the bell curve cares about privacy enough to do something about it

        And, those people vote with their time/money

        Rest of people may prefer cheap and immediate benefits over expensive regulation