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Pending Bill Would Punish Companies That Use Consumer Information to Target Ads

If passed, law might have nationwide – and possibly unconstitutional – effect
Pending Bill Would Punish Companies That Use Consumer Information to Target Ads
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Mar 24, 2008 6:00 AM PDT    Text size: 
NEW YORK — New legislation is picking up steam in New York that would make it harder for Internet giants like Google, Microsoft and Yahoo to use information collected about web surfers as a basis for targeted advertising.

New York state assmeblyman Richard L. Brodsky drafted the new bill, which would make it a punishable-by-fine crime for certain online companies to use information about web surfers without their consent.

“Should these companies be able to sell or use what’s essentially private data without permission?" asked Brodsky, a Democrat. "The easy answer is absolutely not.”

Adult industry lawyer Ira Rothken told XBIZ that even though the law appears to target the big kids on the virtual block – Microsoft, Google and Yahoo – it might affect the adult industry, too.

"It might have an impact to the extent that there are any adult affiliate companies or ad networks that track users' clicks to build an advertising profile," he said, though he cautioned that as far as he knows, the language of the New York bill hasn't been settled yet.

That exact language of the law might raise other Constitutional concerns as well, Rothken said. He explained that because the virtual space of the Internet ignores state and national boundaries, the New York law, if passed, might force Internet companies nationwide to abide by it out of caution.

"And that might be unconstitutional," Rothken said, adding that litigation over the matter may involve the Dormant Commerce Clause, the legal concept that tacitly grants Congress the authority to prevent states from passing laws that affect interstate commerce.

The pending legislation in New York also raises questions about how Internet companies can and should balance the need for users' privacy and the need for efficient advertising.

Earlier this year, a judge in Australia mounted an argument that runs contrary to Assemblyman Brodsky's proposed law. While considering a law that would force online companies to get surfers' consent before using their information, High Court Justice Michael Kirby said that the march of technology was unstoppable.

"It was a good moral and ethical principle to keep people's control over the usage that was made of the information ... and then along came Google and Yahoo," Kirby said. "And when the new technology came, there was a massive capacity to range through vast amounts of information. The notion that you could control this was a conundrum."

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