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News Release
April 25, 2002
CONTACT: David Fish
(202) 289-8928

Lenard to Senate Committee: Privacy Improving
Hollings Legislation Would Harm Innovation, Distort Marketplace

WASHINGTON, D.C. - A noted economist and co-author of a recent national survey of consumer privacy on commercial Web sites told a Senate committee that online privacy is improving and legislation by the panel’s chairman, Senator Ernest F. Hollings, would harm innovation and distort the marketplace.

“Our survey suggests that the privacy practices and policies of commercial Web sites are continuing to evolve and, by at least some criteria, to improve,” Foundation Vice President for Research said in written testimony requested by the Senate Committee on Commerce, Science and Transportation. “And, notably, some of the most significant changes are in the areas that have been identified as raising the greatest concerns for consumers – such as placement of third-party cookies and third-party sharing of information.”

The survey, Privacy Online: A Report on the Internet Practices and Policies of Commercial Web Sites, is based on information collected and tabulated by Ernst & Young. The new data are directly comparable to those contained in a May 2000 FTC report, offering a means of measuring progress on the privacy front.

“Because the marketplace for personal information produces substantial benefits, and because there is no evidence of market failure or consumer harm, there is no reason to adopt a regulatory regime of the type envisioned by S. 2201,” Lenard wrote. “Regulation imposed on a market that is working well will not be helpful and, in fact, will introduce distortions. Even [the] notice requirement will lock current practices in place and reduce innovation.”

Among the most important findings of the Foundation’s privacy study: Web sites are collecting less information; privacy notices are more prevalent, more prominent and more complete, and more sites offer choice; and P3P adoption is off to a rapid start, but seal programs are growing relatively slowly.

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation