Witness the ad industry’s reaction to claims it is dragging its feet on “Do Not Track,” a system to let consumers tell companies not to harvest their online personal information.

“We keep getting demagogued by the FTC,” Stu Ingis, the head of the Digital Advertising Alliance, told AdWeek. The remark came in response to a speech this week in which the head of the Federal Trade Commission suggested new rules might be on the way.

Does Ingis have reason to worry? Perhaps. Consider that after a year of relative silence, the dreaded (in the ad industry, anyway) “Do Not Track” phrase is back in the news on a regular basis. Next week, for instance, U.S. Senator Jay Rockefeller (D-W.Va)  is holding a public hearing to trumpet his do-not-track legislation. Meanwhile, Microsoft and Mozilla are setting their Internet Explorer and Firefox browsers to block third-party cookies — small, ubiquitous computer programs that record the web pages you visit.

For advertisers, these developments threaten to throw a wrench into an ad system that puts a high value on “retargeted” ads. Indeed, there is already evidence that fewer cookies means lower ad prices.

On the other hand, any type of sweeping law is unlikely. While politicians like beating the privacy drum, the details — and even the definition — of “Do Not Track” are hopelessly complicated. Companies like Google and Facebook (which are giant advertising firms) claim the term is confusing to consumers and, in some cases, have chosen to ignore browser instructions about cookies.

At the same time, these companies are doubling down on ad products that target individual users. Facebook, for instance, now lets customers buy ads based on third party data and is even partnering with retail outlets like drug stores to collect users’ offline shopping information. The social network and other tech companies, which have growing clout in Washington, will lobby hard to prevent any serious change to the current ad system.

Finally, the focus on cookies could ultimately prove to be a red herring in the”Do Not Track” debate. This is because more consumers are using mobile devices to access the internet — and these devices don’t rely on cookies for advertising in the first place.  In response, Apple has developed a sophisticated way for advertisers to target users’ devices while companies like TapAd and Adelphic have found ways to identify users no matter what device they use. In other words, any new “Do Not Track” law that targeted cookies would have a limited effect in a world where marketers follow us on our mobile devices.

The bottom line is there has been more sound and fury than usual about “Do Not Track” but that comprehensive privacy reforms are nowhere in sight.

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As an examination of the evolving economics of snapping celebrity photos, Jenna Wortham’s Tuesday New York Times blog post about how a recent candid pic of Beyonce spread across the internet is pretty revelatory. Lurking below the surface, though, I think there’s an even bigger story about how easy it is to snap and publish photos of everyone — not just celebrities — and for those photos to spread further and faster than ever before possible.

Just recently, for example, some relatively harmless (albeit juvenile) “big dongle” jokes put two unwitting conference attendees in the public eye and cost one of them his job. He wasn’t on stage; he was sitting in the 10th row during a talk. The woman who tweeted their images and her complaint ultimately lost her job, too, but her misfortune doesn’t cover his rent.

Even ten years ago, that woman wouldn’t have had a cellphone with a camera and an internet connection and a platform to spread the pic to thousands of Twitter followers — and their followers — in seconds.

I’m not certain privacy laws created at the dawn of the photography era and advanced during the print-media era are well suited to protect our solitude and anonymity in the Instragram era. I actually wrote about this in September 2011, but now seems like a good time to re-raise some of the tough legal questions that phenomena such as self-publishing, social media and viral content raise. Here are some situations where the social web confuses traditional definitions of public and private, and publication versus publicity:

If a celebrity’s friend tweets a photo of that celebrity smoking pot in his own house, is that information protected because it’s newsworthy?

If I’m an individual who simply wants to keep to myself — no Facebook, no Twitter, not even an email address — is writing about me on a personal blog or Facebook page, or uploading (and/or tagging) photos of me, “highly offensive to a reasonable person?”

Even if a disclosure is highly offensive, does publication via social media constitute publicity? What if the publisher only has 3 friends? Or 100? Or 2,000?

Does something going viral change a publication among friends into publicity?

What if a Flickr photo from an intimate dinner with friends, not highly offensive, but potentially embarrassing just because someone is ugly, goes viral and the subject becomes a laughing-stock? What’s the recourse?

You can insert Instagram, Tumblr or Pinterest into those example and the questions remain essentially the same.

And with photos, especially, there’s a lot to consider:

[T]he confluence of facial-recognition technology, cloud computing and big-data processing could soon make it possible to determine a person’s name and any publicly accessible information about them via a mobile app. Nefarious types with some data-science skills could predict your Social Security number knowing just your name, age and hometown. And it all starts with a single photo on Facebook.

For someone who has intentionally kept a low profile online to avoid sharing personal information, the advent of such technologies completely undermines that personal decision. Far from being just a face in the crowd or a guy at the end of the bar, anyone with a mobile phone and $4.99 app could know more personal information than that person would ever share willingly. All because his friends are sharing the details of their own lives online.

A Google Image search for “fat guy speedo.” Public? Yes. Fair to be presented to the entire world with one click? I don’t know.

For us everyday, non-celebrity types, going out in public used to provide anonymity because we were just another face in the crowd. A dinner or party with some friends, even a family reunion, used to be a relatively private affair. Now, we’re just an Instragram post away from being part of the digital record and possibly the subject of public ridicule.

It used to be there was public and then there was public. There was private and there was private. For better or for worse, social media and smartphones are blurring those lines. Maybe we need some boundaries.

Feature image courtesy of Shutterstock user Zurijeta.

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This is scary stuff and could mark a new low point for privacy in America. Thank god, then, that the report wasn’t true. Instead, the “feds all up in your email” story appears to have been the latest attempt to exploit readers’ fears of a growing surveillance society. Here’s a quick look at what happened:

Panic over privacy

Last Tuesday, as Americans prepared to settle into days of turkey and TV, the tech news site CNET published an alarming story headlined: “Senate bill rewrite lets feds read your e-mail without warrants.”

According to CNET, the Chairman of the Senate Judiciary Committee, Patrick Leahy (D Vt), quietly rewrote a proposed law to give vast new investigative powers to 22 agencies like the Federal Reserve and the FCC. CNET pointed to excerpts from a draft bill to suggests agency gnomes would no longer even need a warrant to read your emails, Facebook musings or Google documents.

CNET’s would-be privacy bombshell soon received appropriate attention, even landing at the top of the Drudge Report. The site, which has a massive audience and enjoys embarrassing Democrats, reported it like this:

Other sites also began reporting on the Senate’s scary new plan to let agencies read our emails.

What really happened

Not everyone, however, took the CNET report at face value. Kashmir Hill, a veteran privacy reporter at Forbes, put it bluntly on Twitter:

The CNet report on a bill that would make warrantles searches of your email A-okay is bunk. Some flawed reporting there.

— Kashmir Hill (@kashhill) November 20, 2012

Hill soon issued a rejoinder to the CNET report, noting that the bill it cited was just one of many versions circulating in the Senate and was not one being taken seriously. She also pointed out that such a law would come at a disturbing time given the recent flap over General Petraeus’ email. Finally, Hill quoted a Leahy spokesman who said the article was “wrong.”

Other news outlets soon published additional denials from Leahy’s office. Meanwhile, sites like The New York Times, The Wall Street Journal and Politico simply ignored l’affaire Leahy altogether. (For a level-headed rundown of the whole episode, including how the feds can already read your email in some cases, see Wired’s report here.)

Whether CNET was set up by one of Leahy’s enemies or simply jumped the gun in reporting a draft bill isn’t clear. The only response to the controversy from the story’s author, Declan McCullough, was to write a follow-up piece that suggested CNET’s initial story had helped force Leahy to back down.

Crying Wolf

If nothing else, this non-scandal over email privacy reveals how these stories exist in a media sweet spot that taps public fears of technology, the government and big companies. News stories that confirm suspicions about an online Big Brother will always attract an audience, especially as they appeal to both liberals and right-wing libertarians.

Unfortunately, the widespread fears over online privacy also mean that it’s easy for the media to pander to them. Any headline with some combination of “privacy,” “Google” and “government” is likely to track well.

The bigger problem here is that online privacy is a serious issue — every day we turn more of our personal information over to the cloud with little assurances that it will remain safe from companies and governments. But every time the media points to smoke without fire, the greater the chance we will tune out genuine privacy threats.

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For anyone who missed it, Judge Matthew Sciarrino Jr. told Twitter this week that he would hold it in contempt of court unless it turned over the account of an Occupy Wall Street protestor by this Friday. Bloomberg reports he said:

“I can’t put Twitter or the little blue bird in jail, so the only way to punish is monetarily…”

Sciarrino is also demanding the company hand over its earning statements so that he can assess a possible fine. Twitter has already responded, asking Sciarrino to refrain from the “drastic” remedy while an appeals court addresses the privacy issues.

What’s going on here? To appreciate the significance, it’s important to know a few things about the case and Sciarrino himself.

First, the judge. In 2009, Sciarrino made a national fool of himself after news reports explained how the judge had been disciplined for “Facebook addiction”. The reports cited a series of “incidents”, including Sciarrino’s habit of updating his Facebook status from the bench. The judge also reportedly snapped a photo of his crowded courtroom and posted it on the social network.

Even more serious were Sciarrino’s attempts to “friend” the lawyers who appeared in his court — a highly unprofessional move that placed the lawyers in an awkward ethical and legal position. A Staten Island news site also reported that the judge had a MySpace page on which he posted a campaign poster for his “friend,” a Republican candidate for state office.

These antics, in other words, reveal that Sciarrino is the very last person who should be deciding a cutting edge social media case with big implications for speech and privacy. Which brings us back to the Twitter case.

In April, Sciarrino declared that an Occupy Wall Street protestor could not challenge a police subpoena of his Twitter account because he did not own the tweets in the first place. The ruling included flippant remarks to show off his show social media prowess, including a finding that that motion to “#quash” was “#denied.”

When Twitter then stepped in on behalf of its user, Sciarrino brushed off the affair by saying the protestor had no constitutional protections in the Twitter account. This ruling also contained extravagant rhetoric in which he said Twitter was like shouting from the street and that “the street is an online, information superhighway.”

The rulings appear to contain a number of blatant factual and legal errors that Twitter is now appealing to a higher court. Sciarrino, however, is doubling down on his bluster with the contempt threats. There threats are not only an abuse of power (they harm Twitter’s basic right to appeal) but also appear to be a juvenile attempt to grab headlines (why on earth does he need Twitter’s earning statements?). And, as Twitter notes, the contempt threats are completely unnecessary since the protestor’s trial is not till December and the appeal will likely be heard in November.

“The decision interferes with the right to appeal and the parties’ ability to fully protect the important First Amendment and Fourth Amendment rights implicated by the subpoena,” said attorney Mariko Hirose of the New York Civil Liberties Union in an email statement.

In other circumstances, the antics of Judge Facebook might be funny — but not when the case in question is crucial to defining privacy rights in the age of social media. Twitter, its users and the American public deserve better than this. Sciarrino is in well over his head and the time has come for him to back off and let the appeals court made a decision.

You can read the latest filings here (h/t New York Law Journal) :

Twitter Re Contempt

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In the past, it hasn’t made much of a difference in how advertisers interested in your mobile behavior used that information to target ads at you.  But George Bell, CEO of mobile ad network Jumptap believes advertisers need to be smarter about separating so-called “impulse” behavior from “intent” behavior, and said his company has a new way to help them do it.

By partnering with thousands of publishers, third-party data providers like Datalogix and Acxiom, as well as data companies that focus on vertical-specific offline data (such as Polk for automotive data), Bell said the company is linking consumer behavior on mobile and the web with offline data to give advertisers a more global picture of their activity.

Distinguishing impulse from intent behavior

“Because of the nature of the device –- it’s always on and always on your person –- people use [mobile devices] to express impulse… people tend to fantasy shop,” he said, adding that other impulse actions include clicking on ads or content by mistake or out of curiosity. “If you don’t have a way to see consumer behavior across screens you’re not going to get a full enough picture of the consumer’s intent.”

From its publisher partners, he said, Jumptap is given hashed (or anonymized) profile information about mobile users–including email addresses–which is then forwarded to the third-party data providers. Those companies query their databases to match mobile information about users to information they might have about their online or offline behavior. The vertically-focused data companies supply additional information to further flesh out consumer profiles.

That’s a lot of consumer data to piece together, especially for privacy-minded smartphone and Web users who may not want their personal information shared with outside companies. But Jumptap said it doesn’t handle user information until it’s anonymized and that it gives mobile consumers tools to learn about the process and opt out.  Last month, the company announced that it has partnered with Evidon, the ad tech firm powering the AdChoices icons that lead to privacy notifications, to bring those icons to mobile web and app ads.

Tracking consumers across multiple devices

Historically, mobile ad targeting has used indicators related to the devices themselves (including the device type, usage, data plan and zip code) and consumer interaction with content and advertising on the device.  Bell said Jumptap’s new “consumer-level” approach to targeting gives advertisers the ability to distinguish between a consumer searching for a Rolex who is actually a luxury shopper and a consumer who is really a student with little income, who happens to be in an affluent zip code, clicking on ads (maybe even by mistake) for high-end goods.

But the company isn’t the only one coming up with ways of tracking and targeting consumers across multiple devices to get more complete pictures of their behavior.  Through device recognition (or “device fingerprinting”), which involves the collection of potentially hundreds of data points flowing off of a mobile or desktop device to identify it, advertisers could start to link behavior across iPhones, tablets and laptops.

As my colleague Ryan Kim has reported, a team of ex-AdMob and Google scientists launched Drawbridge to target advertising across platforms using consumer behavior data from online and mobile ad requests.

Jumptap said it doesn’t yet have data showing the effectiveness of its approach but said a handful of advertising clients are currently using it in beta. As the company looks ahead to an IPO within a year, the ability to target mobile consumers with more granularity will help keep it competitive in an increasingly active marketplace.

For more on mobile monetization, check out GigaOM’s upcoming Moblize conference in San Francisco.

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Last year, the firm found that 27 percent of U.S. adults over the age of 18 indicated that they will opt out of online behavioral advertising to manage privacy. This year, that figure has nearly doubled to 50 percent. Additionally, 76 percent said they don’t allow companies to share their personal information with a third party (up from 67 percent last year) and 90 percent said they use browser controls to protect their privacy, including deleting cookies (which is up from 84 percent last year). Fifty-eight percent of respondents said they “do not like” online behavioral advertising, which is an increase from 54 percent in 2011.

TRUSTe’s business is based on convincing companies that they need to think about privacy (the company audits privacy policies and provides other privacy-related services) and word choice and context can influence outcomes of consumer opinion surveys. And TRUSTe is relying on self-reporting so there’s a chance that people are reporting a tougher stance on privacy than their actions actually reflect. But TRUSTe’s findings are pretty consistent with recent independent research and data.

In May, Mozilla said adoption rates for Do Not Track privacy features on Firefox were 8.6 percent for the desktop users and 19 percent for mobile users, which was up from less than 5 percent for desktop users in September 2011.  A March survey from the Pew Internet & American Life Project found that 73 percent of respondents would “not be okay” with a search engine tracking searches because it was an invasion of privacy and 68 percent said they were “not okay” with targeted advertising because they didn’t like having their online behavior tracked and analyzed.

As big data grows and online tracking techniques become more sophisticated, TRUSTe’s results indicate that consumers are becoming increasingly aware that personal data is valuable currency.  Twitter’s recent decision to support Mozilla’s Do Not Track privacy controls and Microsoft’s announcement that it wanted to make Do Not Track a default could be making these issues more top of mind for consumers. Increased regulatory interest in online tracking, as well as ongoing news about tech companies’ privacy gaffes, are also likely contributing to consumer awareness.

Between news that Facebook is planning to release a new mobile ad targeting product and recent M&A activity in the space, mobile advertising is heating up. But, as TRUSTe’s report further shows, privacy continues to be a big concern for mobile users. For example, while 62 percent of smartphone users say they’re aware of mobile tracking for targeted ads, only one percent likes it. Less than 10 percent of smartphone users said they’re willing to share specific location information, web browsing behavior, their home address or contacts with mobile apps, the report said.

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The case itself involves Malcolm Harris, one of hundreds charged with disrupting traffic after a protest on the Brooklyn Bridge last summer. To build the case, prosecutors asked Twitter to turn over Harris’s account, which contains not just a record of his public messages but could also contain more private information such as the location of his tweets, personal messages and deleted items.

The case attracted media attention after Harris applied to quash the subpoena directed at Twitter. In April, Judge Matthew Sciarrino Jr. ruled that Harris couldn’t sue in the first place because the tweets in question belonged to Twitter and not to him. Sciarrino Jr. also lambasted “widely-believed” but “mistaken” notions about online privacy and attempted to show off his fluency in social media by adopting Twitter’s hashtag convention to write that the motion to “#quash” was “#denied.”

Twitter responded to the April ruling by moving itself to quash the subpoena itself — an effort that came up short today. The company said in an email statement:

“We are disappointed in the judge’s decision and are considering our options. Twitter’s Terms of Service have long made it absolutely clear that its users *own* their content. We continue to have a steadfast commitment to our users and their rights.”

Tweets: Do they belong to you, Twitter or the street?

The Harris ruling is larded with flamboyant rhetoric but also raises important questions about how privacy law should apply to social media. In ruling against Twitter and Harris, Sciarrino Jr. invoked a 1976 case in which the Supreme Court ruled that a bank didn’t violate user privacy when it turned over customer records because the records were the bank’s property. This raises the question of whether our Facebook and Twitter accounts are just like bank and phone records.

Strangely, Sciarrino Jr. said that Harris’ tweets were Twitter’s property but also found that social media companies were just like witnesses who overhear something shouted in the street:

Well today, the street is an online, information superhighway, and the witnesses can be the third party providers like Twitter, Facebook, Instragram, Pinterest, or the next hot social media application.

The judge holds himself out as an authority on social media by dropping company names and citing recent law journal articles on social media and the judiciary. He has also learned about it firsthand; in 2009, he was disciplined by court authorities and transferred from Staten Island to Manhattan after lawyers complained about him friending them on Facebook.

Sciarrino Jr.’s analysis of the Harris decision is interesting, and perhaps troubling, because it appears to offer no legal protection at all to social media accounts. On one hand, the judge concludes that users have no right to object to account searches (or even know about them) because the accounts are not their property. But at the same time, he characterizes Twitter and Facebook as passive witnesses whose role is to simply pass on information.

The Founding Fathers and the Right to Tweet

Sciarrino Jr. finishes with a flourish, noting that “Samuel Adams, Benjamin Franklin, Alexander Hamilton and Thomas Jefferson would have loved to tweet their opinions as much as they loved to write for the newspapers of their day (sometimes under anonymous pseudonyms similar to today’s twitter user names).”

This analogy is intriguing but also problematic.  As the judge points out, some founding fathers did write anonymously but they were able to keep their anonymity. Under the judge’s reasoning in the Twitter decision, the publisher who printed the Federalist Papers would be forced to identify the authors — and the authors would have no legal rights at all.

Sciarrino Jr.’s decision also fails to address the issue of how much information social media companies must turn over to authorities. The judge points to search engines like Politwoops and Tweleted (services that collect deleted tweets) in order to emphasize that our tweets are inherently public information available to all. But he does little to acknowledge that our Twitter and Facebook accounts contain not just public utterances, but also a wealth of more personal information that we don’t intend for others to see.

The decision, which was first reported by the New York Law Journal and can be read here, means that Twitter must turn over the bulk of Harris’s account to the court which will then determine which parts are relevant to the prosecution.

It’s not immediately clear if Twitter will appeal the decision. The American Civil Liberties Union, which filed a brief on behalf of Harris and Twitter, issued a statement today:

“What is surprising is that the court continued to fail to grapple with one of the key issues underlying this case: do individuals give up their ability to go to court to try to protect their free speech and privacy rights when they use the Internet? As we explained in our brief, the answer has to be no.”

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But Nextdoor, a social network for neighborhoods, is proving that there’s a large market for location-based information provided by a company that’s serious about online privacy. The company will announce Tuesday that it’s partnering with National Night Out to prevent neighborhood violence as it grows and signs up users across the United States, creating an interesting model for startup success.

The idea behind Nextdoor, which GigaOM wrote about at the company’s October launch, is that you use Facebook to connect with friends and relatives, Twitter for news and information and LinkedIn for career information.  But the company thinks there is room for a social network devoted solely to where you live.

“When I bought a house and got married and had children, all of the sudden the neighborhood is the nucleus around which you’re building your life,” said co-founder and CEO Nirav Tolia.

Nextdoor allows users to join a network dedicated to their specific neighborhood and fill out a profile to connect with neighbors in that same network. Neighbors can create profiles with the names of their family members, information about pets and interests, and photos of their house. They can message each other asking for babysitters, post about household items up for sale, crowd-source issues with public utilities or ask about lost dogs.

Part of what’s especially intriguing about Nextdoor is its exclusivity and commitment to online privacy. With most apps you hear about, it’s easy enough to go online, enter some information about yourself, and get started on the network in seconds. Not so with Nextdoor.

My neighborhood doesn’t have an established Nextdoor community, and if I wanted to start one, I’d need to find nine neighbors and have them all verify their addresses within 21 days. Otherwise, no Nextdoor for me. And to verify those addresses? My neighbors would need to either accept a call from Nextdoor to their a landline phones, verify their local address with a credit card, or have a paper postcard mailed to their address. You can’t exactly sign up in seconds.

“It’s definitely the tortoise versus the hare approach,” Tolia said.

But for a company that’s aggregating incredibly personal information, like the names and faces of your children and photos of where you live, an obsession with privacy and instance on verified information is understandable, and something you could see users appreciating.

“In the short term, it’s very painful,” Tolia said. “But in the long-term, it has been a very powerful platform.”

The slow sign-up process also addresses one of the biggest doubts at Nextdoor’s launch, which was whether people would use it.

So far, the approach seems to be working, with people creating Nextdoor communities in 48 states and 2,800 neighborhoods across the country. The company refused to provide any details about registered or active users, however, saying only that at the moment, around 20 new Nextdoor websites go live each day.

What’s the future for a clever startup that isn’t monetizing its service right now? Certainly partnerships with local governments and intitatives like National Night Out seem like a good fit, and position the company as a good neighbor-type service. But beyond that, there seems like incredible potential for making money off the localized personal data that the company collects. Tolia said he absolutely will not open the service up to political advertising, even though that would seem like a lucrative  and obvious partnership, because of the potentially polarizing affect. But Tolia said the inclusion of Yelp and Twitter-like promoted ads for local businesses is a definite possibility.

So it’s worth keeping Nextdoor on your radar — assuming you can find nine neighbors to help you check it out.

This story was updated Tuesday in two spots to clarify the sign-up process for Nextdoor.

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Just look at the hysteria that transpired after Google announced its new privacy policy in late January. The changes whittled down about 70 different policies into one and brought YouTube and Web history data under the same rules as most of the services Google offers. First it was a few dozen state attorneys general expressing concerns over the new policy, claiming Google is leveraging the ubiquity of its services by taking ever further advantage of users’ personal data. More recently, on March 20, it was a trio of class-action lawsuits jointly filed in California, New York and New Jersey, claiming Google’s new policy violates users’ privacy rights (and, somehow, the Federal Wiretap Act).

But these suits and allegations are silly at best and disingenuous at worst. They piggyback on the confusion over the new privacy policy, despite the fact that there is not much that is new. These types of suits also ignore how free consumer-focused websites make money, and they take tricky issues like consent and put them in ludicrously simple terms that won’t help advance how we handle privacy in an online age where we don’t know how our Web behaviors will change from week to week.

Google’s not-that-new privacy-policy battle and its age-old battle to monetize users

For a deeper look at the silliness of the constant suits over privacy, let’s go to the class-action lawsuit. Here is why the complaint in the March 20 lawsuit claims the plaintiffs are entitled to damages:

Google is now aggregating consumers’ personal information without consumers’ consent; has failed to provide a simple, effective opt-out mechanism; and Google’s primary, undisclosed reason for doing so is its own commercial advantage, private commercial gain, and financial benefit. [emphasis mine]

But Google isn’t now doing anything. According to Google, its privacy policies have always allowed it to combine information among services, and the new policy only folded YouTube and Web history into the mix. In that regard, there’s actually little that’s new except for the condensed format. Furthermore, a Google spokesperson told me last week it hasn’t even rolled out any new features or services utilizing the new permissions it does grant itself. It isn’t yet even doing what it’s being accused of doing.

When it does use the few new permissions it has under the new policy, it will be in part because Google is trying to evolve its products so they don’t become obsolete, and, yes, to make money. Using consumer data to serve advertisers is how Google makes its money and can afford to offer its myriad services for free. That’s really no secret, and it’s not something Google should have to constantly remind users about.

Like Facebook’s Sponsored Stories, which are the subject of another questionable lawsuit, or Chevron’s touting its use of Techron in its gasoline, Google’s new data practices serve multiple purposes. They all claim to help users, and maybe they do, but they also aim to put more money in the company’s pockets. That’s business.

However, as one attorney familiar with the ongoing spate of privacy lawsuits told me, “It seems as if the alternative [to expanding use of user data] is to freeze these companies in time.” Anything new is scary, and the companies must be punished.

The real issue is consent and what it means in an online age

And then there’s the issue of consent. Both the recent class-action lawsuit and consumer watchdog group EPIC have called out Google for not giving users a chance to expressly consent to the changes. After entering into a settlement with the FTC over the way it shared user information with Google Buzz, Google now has to obtain users’ express consent before changing the way it presents data to third parties.

Google’s official take on how that settlement relates to the firestorm it’s currently facing, according to a company spokesperson, is, “We’re not changing how any personal information is shared outside of Google. No users’ settings regarding the sharing or visibility of their personal information are being changed.”

But even should Google decide to share more data with third parties, the FTC agreement might end up being what one attorney calls “an empty framework.” Making users expressly consent to having Google share their data in new ways isn’t much of a choice at all: If users want to use the service, they will click “I agree.” If not, they won’t use the service. Clickwrap contracts, as they’re called, are no different from shrinkwrap contracts for physically purchased software in that regard, because there’s no room for negotiation.

Interestingly, though, some form of negotiation or à la carte menu of privacy terms is exactly what the class-action lawyers and attorneys general appear to want. One has to wonder how they came to expect that, given the current state of the Web. When it comes to direct agreements between service providers and users of their free services, it’s a take-it-or-leave-it world. The FTC even acknowledges as much in its latest report on Web privacy.

You want out of much of Google’s tracking? Pay for Google Apps

If anything, Google has been remarkably forthcoming — in part because its FTC settlement mandates such clarity — in telling consumers of its free services what has changed and pointing to tools in its account-management settings for controlling how Google uses their data. Just last week, Google rolled out a new service to show users what it knows about them. The efforts probably won’t qualify Google for sainthood, but they’re commendable.

But real debate over business models and how to truly empower users to consent is complex stuff; it’s much easier to jump on the bandwagon, call out Google for impinging on users’ privacy, and call it a day. Stoking the fires of privacy hysteria probably won’t change anything, but it might score some attorneys their legal fees or win some politicians a few more votes.

Feature image courtesy of Albert Bridge; handshake image courtesy of Flickr user Aidan Jones

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• Privacy: How to Avoid the Third Rail of Online Services

(c) 2012 Pinar Ozger. pinar@pinarozger.com

Politicians and the media have been quick to tout ideas like “opt-out” or “do-not-track” but, according to companies that depend on data, these so-called solutions are misguided and could compromise future innovation.

Ashlie Beringer, partner at Gibson, Dunn & Crutcher LLP, is an attorney who has represented companies like Facebook and Flurry in class actions and regulatory investigations over privacy. She believes there is a disconnect between the political rhetoric over privacy and what companies are actually doing with consumer data.

“The conversation is misinformed and driven by a misunderstanding of the value proposition,” said Beringer, speaking at GigaOM’s Structure:Data conference on Thursday.

Jim Benedetto, the CTO of data-provider Gravity and a former MySpace executive, shared her view that the current privacy debate has been guided by politics rather than practice.

But he says companies can do three things to ease consumer concerns and get on top of the debate: provide full transparency to their users; give users full control; ensure the data-for-access exchange provides consumers with real value.

This solution may be hard to implement, though, given that many consumers and politicians lack even a basic understanding of how companies and advertisers use data.

There is also the question of who should own which types of data. While individual profiles may belong to consumers, companies can argue that they own analytic insights based on such profiles.

A final feature of the current privacy debate is that attitudes to data and privacy are vast-evolving. While attaching a photo to an online personal profile was unsettling a decade ago, many people don’t think twice about doing so today.

Companies hope that consumers’ attitudes to data and advertising will evolve in a similar fashion. Their challenge is to educate them before privacy fears gain more traction.

Watch the livestream of Structure:Data here.

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