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Is there a doctor in the house? - July 9, 2008

Let's play word association. What's the first thing that comes to mind when I say "medical condition?" Cancer? Diabetes? Atherosclerosis? Not for Byron Dorgan. At a hearing of the Senate Subcommittee on Science, Technology and Innovation, Wednesday to examine the privacy implications of online advertising, the North Dakota Democrat got hung up on gout, dementia and post-nasal drip. "Suppose I go to WebMD, or I use Google, and I search for gout, dementia and post-nasal drip," Dorgan demanded of the somewhat nonplussed panel of witnesses. "Who knows that's what I searched for and how long do they keep that information about me?" 

Perhaps suddenly struck by how that might sound in an opponent's TV ad come election time, he then quickly began looking for a way out of the examining room. "I'm not saying I ever would search for those things. Maybe Senator DeMint would," Dorgan said, gesturing hopefully toward his blindsided and startled GOP colleague from North Carolina. "I personally disavow any interest in dementia. But say it was post-nasal drip. Say I just wanted to know about post-nasal drip. Would Google know that? Would MSN if I used MSN?"

To say nothing of his gout.

Yet for all the unexpected medical news, the hearing, Privacy Implications of Online Advertising, was serious business. And Dorgan made it clear it won't be the last on the subject. The senator plans to call another one soon to hear from Internet service providers, who declined the invitation to appear Wednesday.

The hearing came just one week after the judge in Viacom's $1 billion copyright infringement suit against YouTube ordered the video-sharing site to turn over the login names and IP addresses of everyone who has ever watched a video on the Google-owned platform, focusing attention on the vast databases being compiled about individual online habits and how that information could be used.

It also comes just two weeks after the controversy exploded over Charter Communications' plans to track the surfing habits of its broadband customers and sell the information to advertisers, using ad-targeting technology developed by Silicon Valley startup NebuAd.

While it's impossible at this point to predict what sort of regulation or legislation might result from the heightened scrutiny of behavioral ad-targeting it's not hard to predict that it could greatly complicate the hopes and plans of content owners, platform providers and ISPs to build online business models around targeted advertising.

What NebuAd was doing for Charter, after all, differed only in degree--and even then not by much--from what platform providers the World Wide Web over have based their monetization models and VC pitches on: selling targeted ads at high CPMs based on data they've collected on user's interests and habits. Take that away--or even just limit its use through regulation--and a lot of online business models go with it.

And it's not like other business models for online video are generating much in the way of actual business at this point, as the Wall Street Journal detailed this morning in its account of Google's struggles to develop a viable advertising model for YouTube. Unlike NebuAd, Google places ads based on context, rather than behavior. The ads you see next to Google search results are trigged by the topic of your search, not by what else you may be doing while online. So far, however, such keyword-based advertising hasn't transferred very well to video.

Even YouTube, moreover, collects information on your viewing habits, just as Google does for your search interests, as Google's senior privacy counsel Jane Horvath acknowledged at Wednesday's hearing to the post-nasal Sen. Dorgan. And those databases can have legal consequences, as YouTube discovered last week in the Viacom case.

Not surprisingly, Google favors comprehensive federal privacy legislation, according to Horvath, which might conceivably shield it from Viacom-like discovery requests in future infringement litigation. But as University of Chicago law professor Randy Picker points out in blog post today, YouTube might still face legal problems stemming from its data retention policies:

[A]fter the release of some information regarding then-Judge Bork’s viewing habits came out in his Supreme Court confirmation hearings, Congress passed the Video Privacy Protection Act of 1988, codified at 18 USC 2710...

I am unaware of any decisions assessing whether an online video provider like YouTube is covered by the VPPA, but it is written in sufficiently media-neutral terms that it appears that YouTube would be covered. If so, that triggers a number of obligations. The VPPA requires the destruction of records containing personally identifiable information “as soon as practicable, but no later than one year from the date the information is no longer necessary for the purpose for which it was collected.” Personally identifiable information is, unsurprisingly, a defined term and “includes information which identifies a person is having requested or obtain specific video materials or services from a videotape service provider.”

Chances are, of course, Congress will stop short of banning outright the collection, use and sale of online behavioral data, if only because it's likely to prove too useful for targeting electoral pitches to potential voters. But it can certainly cause trouble in the meantime, and the heightened scrutiny could scare off advertisers already uneasy about wrapping their ads around YouTube videos.

As Dorgan said Wednesday, "the one thing that's clear from this hearing is that there's a lot we don't know."

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