A new report released by the Federal Trade Commission this week makes a strong case for increased online consumer privacy protection. This report builds on the "Consumer Data Privacy Bill of Rights" issued by the White House last month.

The White House document is largely aspirational, setting general goals such as "Consumers have a right to secure the responsible handling of personal data." The FTC report is far more specific, and includes an endorsement of a "do not track" option for consumers, along with a recommendation that "data brokers" be required to allow consumers to inspect the data that have been collected about them.
You'll notice my exclusive use of the word "consumer" above. That's because both these documents only refer to consumers, not businesses. Whether this creates a giant loophole for business-to-business information publishers or a giant swamp of indeterminate liability remains to be seen.
My sense in reviewing both these documents is that they have been fueled by a strong sense of "we don't know what we don't know." These recommendations are not born out of concern about using cookies to better target advertising. Instead, they stem from a concern that marketers and unknown other parties are building huge electronic dossiers on consumers with no restrictions on the use of such information.
None of this is new. As far back at the late 1980s, I worked with databases that held deep behavioral data on consumers. They were built by mashing up information on what mail order catalogs consumers purchased from, information supplied on product warranty cards, information on what magazines they subscribed to, etc. Low-level Census data were overlaid to gauge income and wealth. Even by today's cutting-edge standards, these were slick marketing tools. And they worked. But they didn't create consumer anxiety or outrage. The worst outcome was you might get more mail order catalogs than you wanted.
What's different now is that technology is advancing faster than the ability to govern it. Identity theft is commonplace. Data breaches happen regularly and are well publicized. Reputable software companies plant tracking cookies against your wishes, or secretly upload your address book from your computer. All this works to create severe information anxiety. And we react by trying to regulate the legitimate players, because we can't even locate the truly bad actors.
Certainly the online marketing industry would benefit from greater transparency and some agreed-upon rules of the road. But we can’t throw the baby out with the bath water. Consumers -- and government -- need to acknowledge that all that free stuff is paid for by advertising. Insisting on free content while at the same time rejecting intelligent ad target isn't sustainable. As an astute blogger recently posted, “Dude, if you aren’t paying for the product, you are the product."