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The Google-Buzz settlement: a buzzkill for online services

The comment period just ended for the FTC’s proposed consent decree with Google over privacy violations when Google launched their Buzz social network last year.   There were about 30 comments posted, but the most important comment we’ve seen is by reporter Grant Gross in his IDG News piece, “Google Buzz Settlement a ‘killer’ for E-commerce”.

Grant reports on how the Google-Buzz settlement could be a real buzzkill for other online services if the FTC makes it a precedent for new privacy regulations.

The FTC’s Buzz settlement requires Google to obtain “express affirmative consent” from users for “any new or additional sharing” of personal information with third parties.  That’s “any” new sharing — even an insignificant change regarding non-personal, non-sensitive data.

While Google is the one who messed-up, the FTC also said this when they announced the settlement.

While “this order technically applies only to Google . . . we think many of the provisions in this order are good business practices we’d expect to see widely followed across the industry.”[1]

So the FTC really wants “express affirmative consent”, or Opt-In, as the model to regulate all online services that share user data with third party apps or advertisers.

Ironically, this new opt-in requirement won’t be so bad for Google, who doesn’t actually share much of anything with third parties in its ad network and search advertising businesses.  And when Google does have to obtain opt-in consent for a change, users will know that the government is keeping an eye on things so they’ll be more likely to consent to the change.

But for a startup company who’s not so well-known, getting opt-in consent will be much more difficult, especially amidst all the fear-mongering media work by privacy zealots.

Moreover, an emerging online service will be making frequent tweaks to its data sharing methods as it adds new services and new advertising partners.  And whenever the company makes a change, their ad revenue will take a hit every time a user fails to give “express affirmative consent” to the new sharing policy.

That’s going to be a buzzkill for innovative business models and ad-supported online services, and for users who’ll wonder why there’s a lot less free, cool stuff appearing on the net.

[1] Jessica Rich, Deputy Director of the FTC’s Bureau of Consumer Protection