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Commerce, Manufacturing, and Trade Subcommittee Discusses President's Privacy Proposal

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Location: Washington, DC

The House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade, chaired by Rep. Mary Bono Mack (R-CA), today held a hearing to discuss the president's new privacy proposal and to consider whether it strikes the right balance between protecting privacy and preserving Internet growth.

Last month, the White House released its privacy framework proposing a consumer privacy "bill of rights" and enforceable industry codes of conduct. Similarly, this week the Federal Trade Commission released its final privacy report, which includes a list of best privacy practices for data collection and user companies and recommends Congress take legislative action. Members questioned Federal Trade Commission Chairman Jon Leibowitz and Assistant Secretary of Commerce for Communication and Information Lawrence Strickling about these proposals and the administration's views on Internet privacy. Members agree on the importance of consumer protections online, but many remain skeptical of the need for legislation and government regulation. They have concerns that recommended mandates could stifle innovation and limit job growth.

"Too much is at stake for us to get this wrong," said Bono Mack.

"I am highly skeptical of Congress' or a government regulator's ability to keep up with the innovative and vibrant pace of the Internet without breaking it. Consumers and the economy as a whole will not be well served by government attempts to wrap the web in red tape. And we cannot ignore that Internet companies have a strong incentive to protect their users -- it's called consumer choice," said Energy and Commerce Committee Chairman Fred Upton (R-MI).

Industry stakeholders also testified today to give their views on the administration's privacy plan. Witnesses support a comprehensive approach to address privacy issues but warned lawmakers to proceed with caution when pursuing regulation.

Jonathan Zuck, President of the Association for Competitive Technology, an advocacy organization for application developers, stressed the need for flexibility in regulation to allow continued innovation. "With such a dynamic mobile ecosystem it is difficult to predict where the market is headed next and what industry standards will be adopted. This makes it difficult to implement a regulatory regime for the app marketplace. The industry is far from mature and activities or practices that regulators seek to address may no longer exist in their current form by the time new rules can be implemented," said Zuck.

Mike Zaneis, Senior Vice President and General Counsel for Interactive Advertising Bureau, suggested that enforceable self-regulation is the best approach to protect both consumers and competition. "Industry self-regulation is flexible and can adapt to rapid changes in technology and consumer expectations, whereas legislation and government regulation can stifle innovation Self-regulation provides industry with a nimble way of responding to new challenges presented by the evolving Internet ecosystem. For our information-driven economy to thrive and continue as an engine of job creation, self-regulation led by industry codes of conduct is the ideal way to balance privacy and innovation," said Zaneis.

"Before we do any possible harm to the Internet, we need to understand what harm is actually being done to consumers. Where is the public outcry for legislation? Today, I'm simply not hearing it. I haven't gotten a single letter from anyone back home urging me to pass a privacy bill. That may change -- and it probably will -- if industry doesn't come up with better safeguards for consumers in the future. But right now, we should resist the urge to "rush to judgment' because we feel a compelling need to do something -- even if we're not exactly sure what that should be," said Bono Mack.


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