FTC Backs Do-Not-Track System for Web

By JULIA ANGWIN And JENNIFER VALENTINO-DEVRIES

WASHINGTON—The Federal Trade Commission weighed in on the issue of Internet privacy Wednesday, calling for development of a "do not track" system that would enable people to avoid having their actions monitored online—prompting immediate objections from the online-advertising industry.

"Self regulation of privacy has not worked adequately and is not working adequately for American consumers," said FTC Commissioner Jon Leibowitz. "We deserve far better."

The FTC endorsed a report by its staff that faulted the industry for not doing enough to protect consumer privacy online. Mr. Leibowitz said the FTC isn't calling for legislation yet but pointed to the report as a recommendation for lawmakers.

"A legislative solution will surely be needed if industry doesn't step up to the plate," Mr. Leibowitz said.

The FTC report comes amid other signs that regulators and lawmakers in Washington are concerned about the privacy issues raised by online tracking. A House subcommittee on consumer protection is holding a hearing on the matter Thursday. The U.S. Commerce Department is also planning to release a report containing online privacy recommendations soon.

At a separate panel on Wednesday, the Commerce Department official in charge of the privacy report, Daniel J. Weitzner, said the current tools for blocking online tracking are "blunt instruments."

"We're supportive of tools that give users more control," Mr. Weitzner said.

The FTC report suggests that the most practical method of providing a do-not-track system would be to include a setting in Web-browsing software that would broadcast people's desire not to be tracked.

Such a method would require Web browser makers to install a do-not-track feature and tracking companies to comply with do-not-track requests.

Major Web browser makers including Microsoft Corp., Google Inc., Mozilla Corp. and Apple Inc. have experimented with do-not-track tools in their browsers, Mr. Leibowitz said.

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Clockwise from top right: Getty Images (2), Associated Press, Bloomberg

"We're going to give these companies a little time but would like to see them work a lot faster," he said.

A spokesman for Microsoft declined to comment on whether the company was experimenting with do-not-track technology in its Internet Explorer browser. The software giant's chief privacy officer, Brendon Lynch, said in a prepared statement that the coming version of its browser will focus on "enabling our customers' choice and control with respect to their online privacy."

A Google spokesman said "the FTC raises some interesting ideas, and we look forward to learning more about what Do Not Track could look like."

Sid Stamm, an executive at Mozilla, developer of the Firefox browser, said the company wants "to help find a way for people to opt out of online tracking."

Apple declined to comment.

How to 'Fingerprint' a Computer

A typical computer broadcasts hundreds of details about itself when a Web browser connects to the Internet. Companies tracking people online can use those details to 'fingerprint' browsers and follow their users.

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Privacy advocates cheered the report. "The FTC finally gets it— consumer privacy is seriously at risk online and off," said Jeffrey Chester, director of the Center for Digital Democracy.

However, the $23 billion online ad industry immediately rejected the FTC's proposal.

Mike Zaneis, senior vice president at the industry's lobbying group, the Interactive Advertising Bureau, said the industry already provides the "functional equivalent" of a do-not-track system with its website, Aboutads.info, which allows people to "opt out" of receiving targeted ads from nearly 60 companies. Mr. Zaneis said consumers wouldn't benefit from turning off tracking because "consumers depend on sharing of data ... to customize news sites, optimize Web services such as social networks, and provide relevant content and advertising across the Web."

Advertisers said restricting tracking could limit the ability of websites to offer free content that is paid for by advertising.

"FTC endorses 'do not track'; an emotional goodbye to free content so kindly funded by advertisers," tweeted Rob Norman, chief executive of WPP PLC's GroupM North America, which buys ads on behalf of corporate clients.

The FTC report also calls for companies to provide "just in time" notice to consumers if they plan to use people's data in a way that is "not commonly accepted" and for companies to give people "reasonable access" to data collected about them.

The report challenged the notion that data collected by tracking companies is benign because it doesn't include user's names.

The report says the distinction between data containing personally identifiable information and anonymous data is becoming less meaningful.

As a result, the FTC report says its recommendations apply to the collection of any data that can be "reasonably linked to a specific consumer, computer or other device."

The ad industry's current opt-out system prevents only the use of tracking data for advertising purposes, not the collection of tracking data.

The FTC supports being able to "opt out of data collection, not [just] out of targeted advertising," said Jessica Rich, the deputy director of the FTC's Bureau of Consumer Protection.

The Wall Street Journal has been examining the online-tracking industry in its "What They Know" series.

The FTC is seeking comments on its privacy recommendations and will issue a final version of its report next year.

Mr. Leibowitz said the report "is not a template for enforcement." He added: "At this point I think we're making recommendations for best practices."

Write to Julia Angwin at julia.angwin@wsj.com and Jennifer Valentino-DeVriesat jennifer.valentino@wsj.com