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Net Groups Scramble To Allay Privacy Fears (06/03/98, 5:27 p.m. ET) By John Borland, TechWeb As calls for better regulation of individual privacy online intensify, several Internet industry groups are coalescing to ward off new regulations. A group of 12 trade associations, including the American Electronics Association and the Business Software Alliance, sent a letter to President Clinton Wednesday outlining a proposal for a self-regulatory mechanism on privacy issues. The document includes a set of standards and recommendations that companies establish internal enforcement mechanisms. "We are convinced that the industry itself can provide better protection to consumers and users that any set of government regulations," said AEA president William Archer. In addition, several other industry groups are pursuing self-regulation campaigns. An informal "Privacy Alliance," led by former Federal Trade Commission (FTC) member Christine Varney, has brought together some of the Net's biggest players, including Time Warner, America Online, IBM, and Hewlett-Packard to develop coordinated privacy strategies and educate smaller companies and consumers. Some of the same companies belong to the Interactive Services Association, which will change its name and focus next month in a parallel bid to answer the call for a governing body, ISA executive director Jeff Richards said Wednesday. The group's new name will be the Internet Alliance. The drive for a concerted industry action on privacy stems largely from a White House speech last summer, in which President Clinton called for online companies to regulate their own privacy practices or face new regulation. Clinton gave the industry until this July to respond. While many of the largest Net companies have updated their privacy policies, few industrywide initiatives have emerged. Although both industry and government officials have paid lip service to the concept of self-regulation, a speech last week by America Online CEO Steve Case at Harvard was one of the first explicit calls for the creation of an industry governing body. "It needs to be unique to reflect the medium," Case said at the Harvard Conference on Internet and Society. "We have to build a culture of trust online, so people will be willing to broaden their circles." The drive to create a self-regulatory regime should get a boost Thursday, when the FTC is expected to release its privacy sweep report, a survey of 1,200 sites that investigated privacy policies and companies' use of personal data. Sources in Washington, D.C., have said the report will be sharply negative, possibly reporting only "single-digit" levels of satisfactory privacy protections. The FTC is likely to recommend some Congressional action as a result of their sweep report, particularly on the issue of protecting information about children, the sources said. Several other stars are aligning to push industry action, however. The Commerce Department is scheduled to issue a report this summer on how well the online industry is regulating its own privacy practices. A government-industry summit on the issue is tentatively scheduled for late June, but Commerce staffers are likely to give the FTC's sweep results significant weight in their own report. Later in the year, a strict European privacy directive will go into effect, potentially barring companies from transferring customer or employee data out of the European Community if they do not measure up to the EC's standards. White House technology adviser Ira Magaziner has also been holding a series of meetings to discuss how companies and U.S. regulators will respond to the new European law. "Our government is trying to represent us as a nation to Europe, and trying very hard to say that we have a privacy regime that makes sense," said Netcom policy analyst Glee Harrah Cady, who is serving as her company's liaison to the Privacy Alliance. "We have not, so far, done a good job of helping them." But the industry is finally beginning to take the right steps, even if education efforts are still slow, participants said. The Privacy Alliance, which was formed about two months ago, is encouraging its member companies to push contractors and online partners to revamp privacy policies. The group will also begin a broader outreach campaign in upcoming weeks, Cady said. The ISA is pursuing a similar tack, educating its members about the administration's drive for privacy protections online and the requirements of the upcoming European directive.
"The really good news coming out of Harvard and [Case's] speech is that there's a real seriousness and intent to do this, and do it right," Richards said.
http://www.techweb.com/wire/story/TWB19980417S0021
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