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It’s Time to Have a Serious Conversation About Internet Privacy Laws

March 14, 2012 - 5 Comments

On Saturday, March 10, Jasmin Melvin published the story “Web Giants Face Battle Over ‘Do Not Track’, Other Consumer Privacy Legislation.” The U.S. government, and governments around the world, have their eyes set on Google, Apple, and Facebook and their current and future policies in regards to internet privacy laws. SOPA, or the Stop Online Piracy Act, was the legislature’s first major attempt at regulating the Internet, and web giants like Google and Wikipedia responded with a day of blackouts, generating “3.9 million tweets, 2,000 people a second trying to call their elected representatives, and more than 5,000 people a minute signing petitions opposing the legislation.” SOPA may have failed, but you can be sure it won’t be the last attempt at regulation. This week, the Federal Communications Commission (FCC), plans to issue new recommendations for Internet privacy and data management policy.

You might think, “What’s the big deal, sure I want my privacy protected from Google, Facebook and the like, this is the United States of America.” Well, it’s not quite that simple. I agree, Google and Facebook can’t afford to get this one wrong: they would risk losing massive numbers of users who opt out, or choose new options that don’t track data or new features such as a “do not track” button. But decisions like this have massive consequences that go beyond personal privacy and data management.

Google for example generates 96 percent of its US$37.9 billion in revenue from advertisements. Facebook revealed in its recent IPO details that 85 percent of its US$3.7 billion dollars of revenue could be attributed to advertisements. Marketers and advertisers spend large portions of their marketing budgets on targeted web ads through Google and Facebook because these vehicles have significantly higher ROI than non-targeted or traditional advertising. In addition, marketing can be customized and very specific to the individual users, something that’s taken years to perfect. Remember the olden days when web ads were about as relevant to you as late-night infomercials on cable television?

If the government, Facebook, or Google get this wrong, they risk more than losing a few users. If they get this wrong, they are risking more than 96 percent of Google’s and 85 percent of Facebook’s revenue. Think about this: Would we have any of Google’s current and future innovations without Google Ads? Would we have Android smartphones, Google Goggles, self-driving robot cars, Google Earth, and many more transformative innovations that have come out of Google but had little or nothing to do with their primary revenue stream, advertisements?

Beyond Google and Facebook, what could happen to the countless number of content-driven websites that depend on advertisements to sustain their business models? How would Mashable, Huffington Post, and Perez Hilton pay their writers or even their rent for that matter?

The economic impacts of getting this one wrong are vast and for the most part unpredictable. But getting this one right could truly transform the Internet, the economy, and online commerce.

One proposed idea came from Jeremiah Owyang of Altimeter Group a few years ago, suggesting the future of social media to be a profile and data exchange. A world where I own my personal data and information, and I choose who to give it to, and potentially only in return for something of value to me. That could be something as simple as discounts, coupons, early purchase options for new products, or something we traditional marketers haven’t even thought of yet. Google and Facebook need to take into account the third, and most important, person in this relationship: the user. They will need to develop new models that create this personal data and information exchange or marketplace, to create value for the advertisers, value for the users, and new revenue streams for their businesses.

This one is too important to get wrong, so before you have the natural and very American reaction to protect your personal privacy, think about the consequences strick internet privacy laws could have. Are you willing to give up the innovation engine behind the Internet and all things digital because you don’t want a marketer to know where you’re from, how old you are, or what pages you’ve liked on Facebook? If you do care, take the time to review Google and Facebook’s privacy policies, and manage your privacy settings appropriately. Start to think of your data as your digital currency and maybe Google and Facebook will, too.

Reply to this post with your thoughts, your fears, and your better ideas. It’s time for a global conversation about internet privacy laws.

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  1. Charlie
    Your blog reminded me of NPR’s interview with author Joseph Turow of “The Daily You: How the New Advertising Industry is Defining Your Identity and Your Worth”
    He talked a lot about FB privacy and how advertisers will ‘follow you’ to know what ads to post. For example, you say ‘Joe Turow likes Twinkies’ and an ad or sponsored story will go to all of Joe’s friends on the side of their Facebook page.
    Makes me always think twice before I ‘like’ something.

    • Thanks for the comment Mary and I’ll definitely take a look at Josephs book.

      What you’re referring to is call “Friends of Fans targeted ads”. Facebook advertisers can target you with ads for all sorts of reasons, and no one can opt-out of this, but what you’re referring to is one of the ways brands make ads more relevant. The intent of this is not to tell your friends what brands you like, although beware that when you “like” something your friends can see that. But what it’s intended to do, if used properly is target friends of yours that may have similar preferences or interests simply because you’re friends. For example you may have similar preferences in clothing, food, or hobbies, and a brand can assume that there’s a good chance your friends might like them too.

      This theory falls apart if you friend everyone and anyone on Facebook and your friend list doesn’t reflect your real life.

  2. Interesting… and I remember Owyang talking about that.

    The problem is getting the public to reliaze what they are asking for… I had a b-school professor tell me once – “If you are not paying for the product, you ARE the product.”

    • I couldn’t agree more with this. The fact that you are offered something for free insights that you are going to be paying for it somehow and this is normally with your internet activities, in order for the advertising company to display content for your interest.

      The only way that anything will ever change is if more people become aware of what FREE products mean and once educated in the way that online advertising works, actually have them care about the way companies use of their data. The general fact that I can ‘like’ or mention something with a key phrase in it, for example “0800 numbers” and then have cookies from a site simply log that information and then display the necessary advertisement on a following website I visit, that runs the advertising companies ads, is something that 95% of web users will not even be aware of or be enlightened to what is happening. If you gave them a prompt or choice about submitting their information first, then nearly all of them would click ‘no’ to having that information shared. This is where online advertising works, the fact that people just are not aware it is even happening.

  3. Here’s the thing.

    the alternative Owyang is proposing is no different from what is in use today.

    “A world where I own my personal data and information, and I choose who to give it to, and potentially only in return for something of value to me.” <- You already do.

    you give up some information in return for your usage of a given service. Incidentally, the information you surrender is more often than not an essential part of your use of that service.

    I suppose what you’re more concerned about is the extent to which your activities on a given platform is tracked.

    believe they’re free to do whatever they wish with your data, in return of course, for the utility you derive from using their service.