Online Privacy

My point here is not at all anti-innovation, but simply that all innovation is not good, because innovation is a means not an end. People can innovate for both good, and bad, purposes. 

• Cyber-criminals, hackers, predators, terrorists and other malfactors, constantly innovate on the open Internet with malware, viruses, spam, botnets, p2p piracy and phishing, denial of service attacks, etc.
• Cyber-security experts marvel at the innovation and ingenuity of these multiplying malfactors.    

My big point here is that the push for the Government to maximize innovation by mandating an "open Internet" is a knife that can cut both ways. Just like an open Internet enables well-intentioned innovators, it also can enable innovative cyber-crooks and bad actors. 

Anything good can become bad or a problem, if it is taken to excess.

Free Press in its latest report: "Deep Packet Inspection: The end of the Internet as we know it?" continues to mischaracterize "reasonable network management" practices (that ensure quality of service and filter out harmful traffic like spam, viruses, and other malware) as bad practices and misuse of technology that threatens users' privacy and freedom of speech.   

It is inaccurate and unfair to mischaracterize reasonable network management this way.

The Free Press report uses a common analogy about "deep packet inspection" (DPI) technology. It analogizes that use of DPI technology by an ISP would be like the post office going beyond reading the address of a letter and looking inside the letter to read the private contents.

• This partial analogy is designed to lead people to believe that DPI is only a privacy-invading technology without any merit or useful function. 

Let's explore the letter and post office analogy more fairly and accurately.

How can free have a cost? Well a lot of different things are converging in Washington that could bring much more focus to -- "the costs of free" on the Internet.

• Last month's Revised Behavioral Advertising Principles from FTC Staff are largely about making more transparent the privacy "costs" of "free" Internet products and services funded by online behavioral advertising.
• This month's NYT news that House Internet Subcommittee Chairman Boucher now supports passage of new Internet privacy legislation requiring consumer "opt-in" permission in order to exploit consumer information, implicitly recognizes the substantial hidden privacy "cost" of behavioral advertising.
• This week's privacy and security-related complaint to the FTC filed by EPIC against Google's free cloud computing services, further brings to the forefront the hidden "costs" of free on the Internet.

What are the big forward-looking implications for the broader Internet-related economy of Google's announcement it is launching a new variant of behavioral advertising, called "interest-based advertising."

• Analytically, this may be one of the most significant developments in the digital economy, Internet advertising and online privacy in a long time.
• Why? 

First, it is probably a major catalyst escalating and accelerating public discussion about behavioral advertising and online privacy.

Context is always important, and this announcement does not occur in a vacuum. It has broad implications because of the pervasive reach of the issue and the market leadership of the announcer. For example:

What is likely to be the next Twitter, the hot micro-blogging web 2.0 app/phenomenon that lets Twitterers "tweet" to the world what they are doing at any given moment?

• To answer that important forward-looking question we need to extrapolate where current Web 2.0 social networking trends are taking us.

First, since Twitter only allows micro-messages of 140 characters or less (the length of my first sentence), the big trend must be "less is more."

This gave me an idea for a new Web 2.0 killer app: "Fritter."

My prediction on World Privacy Day -- that it was "only a matter of time before there is a public earthquake over" the "Growing Privacy-Publicacy Fault-line" -- came true in less than a month. 

• Facebook's recent publicacy changes to their terms of service led to a quick consumer "earthquake" over who owns their private information online -- an earthquake that was triggered by a strategic blast from the Consumerist blog.
• In a matter of days, Facebook reversed its publicacy changes to its terms of service, restoring them to their previous state. 

Anyone that thinks this is an isolated incident, simply does not understand the powerful underlying tectonic dynamic here -- that there is growing tension on the privacy-publicacy fault-line.

The FTC staff's revised behavioral advertising principles make it clear that the FTC understands the Internet’s growing privacy-publicacy fault-line. The FTC’s new guidelines are all about tackling the growing problem of unauthorized publicacy – meaning the tracking, collecting and “mashing-up” of information consumers reasonably expected to be kept private.  (“Publicacy” is the opposite of privacy.)

• Privacy-Publicacy Fault-line Part I, II, III.

Why are the FTC’s new guidelines a much bigger deal than most appreciate?

First, the new guidelines put a new and brighter privacy regulatory spotlight on Google, the world’s dominant behavioral-advertiser, and to a lesser extent, Yahoo, Google’s distant #2 competitor.

Evidence continues to mount that the real problem on the Internet is that it is not as safe/secure as it needs to be -- not the popular myth that it is not open/neutral enough. (See previous posts in this ongoing series here: Part I, Part II)

• It is a sad state of affairs when there is more media and public policy attention paid to addressing potential "open" Internet problems, than to the very real and increasing Internet safety/security problems.

More evidence on the seriousness of the Internet's growing security problem:

"The Online Shadow Economy: a billion dollar market for malware authors." MessageLabs White Paper

• "The shadow Internet economy is worth over $105 billion. Online crime is bigger than the global drug trade."
• "With little chance of being caught and so much money at stake, it is little wonder that "a huge number of people are involved""
• "...malware is going to get more common and more virulent..."

 "Corporations Are Inadvertently Becoming the No. 1 Security Threat to Their Own Customers, According to New IBM X-Force(R) Annual Report"