The E-Commerce Privacy High-Wire Act

There they were up on Capitol Hill, doing their best impression of people who don’t mind the onerous privacy regulations that are almost undoubtedly about to be forced upon them. America Online was there to speak to a Senate hearing. Hewlett-Packard too.

Clearly, those two organizations represent a wide range of e-commerce companies that have realized lately that they’d better show a little respect toward online privacy. And to their credit, they have been honest about things — to a point. They’d prefer self-regulation, of course, but lawmakers are closing in, armed with public support. So now the companies hope to save some face — and their other ends — by jumping on board the opt-out bandwagon.

You might think the problem for these companies is that the efforts to become champions of privacy are too little, too late. You might think that the companies still don’t get it. AOL and HP waved pom-poms in Washington for opt-out policies that put the onus on consumers, but the customers want opt-in regulations that leave it up to corporations to be the privacy police.

Who will win? The consumer is a powerful foe, but e-commerce has a better chance than you might think.

Powerful Forces

The testimony in support of a far-reaching opt-out policy is just the latest example of big-name e-commerce companies being out of touch with the public on this issue. Amazon.com put itself on the firing line last month for a new policy that immediately drew the ire of online advocacy groups.

Online shoppers have made no bones about their wishes. They would rather be asked up front: Do you want to be tracked, to be targeted, to be marketed to based on your answers to our questionnaire and your click-through habits?

But Amazon would rather have egg on its face than a privacy policy that truly gives the people what they want. This position should give some indication of how valuable all that data being collected is or might be in the future.

Delay and Conquer

The stall tactics of e-commerce — jumping into the self-regulation pool at a late date and now slowly moving to give at least tepid support to opt-out legislation — have been effective. They’ve bought time for e-tailers and online marketers to prove that they can be trusted with personal information. Right now, the majority of consumers don’t trust e-commerce firms enough to go willingly along without being asked. But maybe in a year or more.

That’s because there’s another factor here: the attention span of the American consumer. Call them on the phone, as the Pew Internet & American Life Project did earlier this year, and they’ll tell you yes, they’re angry about privacy. And they even went so far as to say, in large numbers, that anyone who messes with personal information outside the regulated boundaries should be put in jail.

On the other hand, if you don’t ask them, customers don’t exactly take up arms on their own. Has anyone heard of any major fallout — among customers now, not the media or the online privacy groups — from the Amazon policy change? I didn’t think so. And it’s not likely to happen.

Buying Time

The fact is that consumers may trust e-tailers very little, but that small amount of trust is probably enough to keep them from revolting. Because revolting takes effort and organization and experience and time and money and influence — all things that reside much more heavily on the e-commerce side of the fence than over in the consumer’s backyard.

So it looks like a war of attrition will go to the Amazons, HPs and AOLs of the world. The key is to avoid any major missteps, to avoid completely flouting the trust that has been granted. In other words, keep privacy out of the public eye for a while. Give it six months, give it a year and the first battle will be won — at least with people who are already comfortable shopping and buying online.

It may take a bit more work to convince newcomers and would-be online buyers that the water is safe. But they can be brought around eventually. Lawmakers have been spurred to the point they’ve reached so far by the flare-ups on privacy. If things stay cool, everyone can breathe a little easier.