Tuesday, October 23, 2007

Online Advertising: privacy issues are important, but they don’t belong in merger reviews

As the European Commission and the US Federal Trade Commission review Google’s proposed acquisition of DoubleClick, a number of academics, privacy advocates and Google competitors have argued that these competition/anti-trust authorities should consider “privacy” as part of their merger review. That’s just plain wrong, as a matter of competition law. It’s also the wrong forum to address privacy issues. If online advertising presents a “harm to consumers”, let’s try to figure out what exactly the harm is, figure out which online advertising practices to change, and then apply those principles to all the participants in the industry. But we shouldn’t bootstrap privacy concerns onto a merger review. That’s like evaluating a merger of automakers by looking at the gas mileage of their cars. We don’t invoke antitrust law to prevent a merger of car companies, because we think the industry should build cars that use less gas.

Some advocates state that online advertising “harms” consumers. So they reason that the merger of Google and DoubleClick would “harm” consumers more, to the extent that it enables more targeted advertising. But these same critics rarely cite specific examples of consumer “harms”, and indeed, I’m having trouble identifying what they might be. The typical use of ad impression tracking now is to limit the number of times a user is exposed to a particular ad. That is, after you have seen an image of a blue car for 6 or 7 times, the ad server will switch to an image of a red car or to some other ad. This means that a user will see different ads, rather than re-seeing the same ad over and over again. As someone who is sick of seeing the same ads over and over again on television, I think that’s good for both viewers and advertisers. There are also new forms of advertising that are enabled by the Internet that may allow for more effective matching between buyers and sellers. Again, I prefer to see relevant ads, if possible. I go to travel sites a lot, and I’m happy to see travel ads, even when I’m not on a travel site. I don’t want to see ads for children’s toys, and I dislike the primitive nature of television, when it shows me such blatantly irrelevant ads.

We all dislike unsolicited direct marketing by phone. So, we created a regulatory “do not call” solution. But without knowing which precise practices of online advertising create a “harm”, it’s impossible to discuss a potential solution. Moreover, a website that offers its services or content for free to consumers (e.g., a news site), tries to generate revenue from advertising to pay its journalists’ salaries and other costs. Shouldn’t such websites also have a say in whether they should be forced to offer their free content to consumers without the ability to match ads to viewers according to some basic criteria? It’s very clear (but worth reiterating) that free sites are almost always more respectful of privacy than paying sites, because of the simple fact that paying sites must collect their users’ real identities and real credit card numbers, while free sites can often be used anonymously.

Now, some legal observations relating to European laws on merger reviews. The overriding principle protected by those laws is consumer welfare: referring to those aspects of a transaction that affect the supply and demand for goods/services (i.e., that affect quantity, quality, innovation choice, etc.). The reference in Article 2(1)(b) ECMR to "the interests of the intermediate and ultimate consumers, and the development of technical and economic progress provided that it is to consumers' advantage and does not form an obstacle to competition" must therefore be read in this context – consumer interests are relevant to the merger assessment only for the purpose of assessing whether the degree of competition that will remain post-transaction will be sufficient to guarantee consumer welfare.

The fact that non-competition issues, such as privacy, fall outside the scope of ECMR is consistent with the general consensus that merger control should focus on the objective of ensuring that consumer welfare is not harmed as a result of a significant impediment to effective competition. Introducing non-competition related considerations into a merger analysis (e.g., environmental protection or privacy) would lead to a potentially arbitrary act of balancing competition against potentially diverging interests. Accordingly, policy issues, such as privacy, are not suitably addressed in a merger control procedure, but should be dealt with separately.

Indeed, privacy interests are addressed in Directive 95/468 and Directive2002/589 (both of which are based on Article 14 EC and Article 95 EC), Article 6 TEU and Article 8 ECHR, and Google must abide by its legal obligations under these instruments. Such instruments are also far more efficient in addressing privacy issues than the ECMR, as they are industry-wide in scope. Internet privacy issues are relevant to the entire industry as they are inextricably linked to the very nature of the technology used by every participant on the Internet. Information is generated in relation to virtually every event that occurs on the Internet, although the nature of the data, the circumstances in which it is collected, the entities from whom and by whom it is collected, and the uses to which it is put, vary considerably. This situation pre-dates Google’s proposed acquisition of DoubleClick and is not in any way specific to it. More importantly, any modification of the status quo in terms of the current levels of privacy protection must involve the industry as a whole, taking account of the diversity of participants and their specific circumstances.

Google has always been, and will continue to be, willing to engage in a wider policy debate regarding Internet privacy. Issues of privacy and data security are of course of great importance to Google, as maintaining user trust is essential for its success. As a large and highly visible company, Google has strong incentives to practice strong privacy and security policies in order to safeguard user data and maintain user trust. These concerns are one of the reasons why Google has thus far chosen not to accept display ad tags from third parties. The proposed transaction will not change Google's commitment to privacy, and Google is in fact currently developing a new privacy policy to address the additional data gathered through third-party ad serving. Similarly, a number of Google's competitors have announced new and supposedly improved policies to protect consumer privacy, highlighting the robustness of recent competition on privacy issues. There is no reason to suggest that such competition will diminish if Google acquires DoubleClick; to the contrary, such competition appears to be intensifying.

Privacy is an important issue in the world of online ads. But it is not an issue for a competition law review.

Can you “identify” the person walking down the street?

I recently posted a blog on Google’s Lat Long Blog about Street View and privacy.

I’d like to add a few personal observations to that post.

Some people might have wondered why Google posted a blog about what a future launch of Street View would look like in some non-US countries, especially since, so far, it only includes images from 15 US cities. We felt the need to respond to concerns that we had heard recently, in particular concerns from Canada’s privacy regulators, that a launch of the US-style of Street View in Canada might not comply with Canadian privacy regulations. And we wanted to be very clear that we understood privacy regimes are different in some countries, such as Canada, and for that matter, much of Europe, compared to the US tradition of “public spaces.” And of course, that we would respect those differences, when/if we launched Street View in those countries.

Basically, Street View is going to try not to capture “identifiable faces or identifiable license plates” in its versions in places where the privacy laws probably wouldn’t allow them (absent consent from the data subjects, which is logistically impossible), in other words, in places like Canada and much of Europe. And for most people, that pretty much solves the issue. If you can’t identify a person’s face, then that person is not an “identifiable” human being in privacy law terms. If you can’t identify a license plate number, then that car is not something that can be linked to an identifiable human being in privacy law terms.

How would Street View try not to capture identifiable faces or license plates? It might be a combination of blurring technology and resolution. The quality of face-blurring technology has certainly improved recently, but there are still some unsolved limitations with it. As one of my engineering colleagues at Google explained it to me: “Face detection and obscuring technology has existed for some time, but it turns out not to work so well. Firstly, face recognition misses a lot of faces in practice, and secondly, a surprising number of natural features (bits of buildings, branches, signs, chance coincidence of all of the above) look like faces. It’s somewhat surprising when you run a face recognition program over a random scene and then look closely at what it recognises. These problems are also exacerbated by the fact that you have no idea of scale, because of the huge variations in distance that can occur.”

Lowering the quality of resolution of images is another approach to try not to capture identifiable faces or license plates. If the resolution is not great, it’s hard (or even impossible) to identify them. Unfortunately, any such reduction in resolution would of course also reduce the resolution of the things we do want to show, such as buildings. So, it’s a difficult trade-off.

Some privacy advocates raise the question of how to circumscribe the limits of “identifiability”. Can a person be considered to be identifiable, even if you cannot see their face? In pragmatic terms, and in privacy law terms, I think not. The fact is that a person may be identifiable to someone who already knows them, on the basis of their clothes (e.g., wearing a red coat), plus context (in front of a particular building), but they wouldn’t be “identifiable” to anyone in general. Others raise the issue of whether properties (houses, farms, ranches) should be considered to be “personal data” (so that their owners or residents could request them to be deleted from these geo sites, like Google Earth)? Last month, various German privacy officials made these arguments in a Bundestag committee hearing. They reasoned that a simple Internet search can often combine a property’s address with the names of the property’s residents. Others see this reasoning as a distortion of privacy concepts, which were not meant to be extended to properties. And the consequences of that reasoning would mean that satellite and Street View imagery of the world might be full of holes, as some people (disproportionately, celebrities and the rich, of course) would try to block their properties from being discoverable.

Google will have to be pragmatic, trying to solve privacy issues in a way that doesn’t undermine the utility of the service or the ability of people to find and view legitimate global geographic images. I personally would like to see the same standard of privacy care applied to Street View across the globe: namely, trying not to capture identifiable faces or license plates, even in the US, regardless of whether that’s required by law or not. But I recognize that there are important conflicting principles at play (i.e., concepts of “public spaces”), and “privacy” decisions are never made in a bubble.

We’re engaged in a hard debate, inside Google and outside: what does privacy mean in connection with images taken in “public spaces”, and when does a picture of someone become “identifiable”? Can we have a consistent standard around the world, or will we have to have different standards in different countries based on local laws and culture? This isn’t the first time (and I hope, not the last time) that Google has launched a new service, letting people access and search for new types of information. Those of us in the privacy world are still debating how to address it.

I think the decisions taken by the Street View team have been the right ones, even for the US launch, at least at this point in time, and given the current state of technology. But a more privacy-protective version in other countries (and someday, maybe in the US too?) would be a good thing, at least for privacy.

Tuesday, October 16, 2007

I like the anonymity of the big city

For much of history, people lived in small communities, where everyone knew them, and they knew everyone. Identity was largely inherited and imposed, and the ability of people to re-invent themselves was quite limited. You were father, farmer, drunkard, and everyone knew it.

The big city changed all that, by offering anonymity and choice. Against the background of anonymity, people can choose their identity, or choose multiple identities, often by choosing the community of other people with whom they live, work or play. In the city, you can choose to cultivate multiple identities: to mingle with bankers or toddlers by day, to play rugby or poker by night, to socialize with rabbis or lesbians, and to do all this while choosing how anonymous to remain. Maybe you’re happy to use your real name with your bank colleagues, but delight in the anonymity of a large nightclub. And you can share different parts of your identity with different communities, and none of them need to know about the other parts, if you don’t want them too: work and home, family and friends, familiarity and exploration, the city allows you to create your identity against a background of anonymity.

Like the city, but on a much, much bigger scale, the Web allows people to create multiple digital identities, and to decide whether to use their “real” identity, or pseudonyms, or even complete anonymity. With billions of people online, and with the power of the Internet, people can find information and create virtual communities to match any interest, any identity. You may join a social networking site with your real names or your pseudonyms, finding common interests with other people on any conceivable topic, or exploring new ones. You may participate in a breast cancer forum, by sharing as much or as little information about yourself as you wish. You may explore what it means to be gay or diabetic, without wanting anyone else to know. Or you may revel in your passion to create new hybrids of roses with other aficionados. The Web is like the city, only more so: more people, more communities, more knowledge, more possibility. And the Web has put us all in the same “city”, in cyberspace.

Life is about possibilities: figuring out who you are, who you want to be. Cities opened more possibilities for us to create the identities we choose. The Web is opening even more.