W3C Co-Chair Rejects Industry Proposal, Commits to July Deadline as Stakeholders Say Consensus Unlikely

The industry proposal does not meet the group’s criteria for a DNT standard, co-chairs Swire and Matthias Schunter wrote in an announcement (http://bit.ly/149MvSu) and explanatory memorandum sent to stakeholders. The industry proposal does not fulfill the group’s charter because it doesn’t address user requests to be exempt from either ad targeting or data collection, the announcement said. The proposal does not provide users who enable DNT reduced tracking. “Retargeting and profiling would continue unchanged” under the industry draft, the co-chairs wrote. Finally, the industry draft would change “data hygiene” practices -- as it addresses “how to conduct market research and product development” -- but would not result in a “significant change from the status quo,” the statement said. Though the industry proposal is more likely to garner support from the industry, “adoption of a standard with no or little change from the status quo would not be sufficient,” the co-chairs wrote. The working group will move forward with the Editors’ Draft, and it “will not accept change proposals that are merely re-statements” of industry positions regarding data de-identification requirements and uses and the definitions of tracking and collection, they said.

A document based on the Editors’ Draft will not be adopted by the industry, said Rachel Thomas, vice president-government affairs at the Direct Marketing Association (DMA). In comments last week, Thomas said the Editors’ Draft “fails to put choice and control in the hands of the consumers” by allowing “a large volume of non-browser, non-user activated DNT signals to participate in the online ecosystem.” Additionally, the Editors’ Draft defines tracking too broadly, she said in comments. The definition “is too broad and difficult to interpret for both what is and what is not considered to be within the scope” of DNT, she wrote. Conversely, the industry proposal -- which limited what kind of data collection and uses could be considered “tracking” -- “is simple and easy to follow,” she said.

The co-chairs “just threw away an opportunity to move forward” with a proposal that could be adopted and implemented by industry, Thomas told us. The industry proposal had “the two keys to success,” she said, “greater consumer protection” through improved data hygiene and “adoption across the entire industry.” Without the industry proposal, there won’t be adoption, and “without that adoption, there isn’t success at the W3C,” she said. “There’s no reason to move forward with a draft” that won’t be adopted. The fact that the industry proposal was rejected “doesn’t lessen industry’s commitment” to consumer protection online, Thomas said. Industry self-regulatory efforts continue to protect consumers online, including the Digital Advertising Alliance’s AdChoices program, she said.

Some industry representatives are “committed to continuing to work with all stakeholders in good faith if progress can be made toward a consensus standard that improves consumer privacy and can be implemented,” Marc Groman, executive director of the Network Advertising Initiative, told us. With the group considering the Editors’ Draft, “many of the most challenging issues remain to be resolved,” including a technical way to ensure the DNT signal was sent by the user and not by software, he said. Industry members “are also concerned about the anti-competitive impact of a DNT standard, particularly the potential consequences for long tail publishers, small business, entrepreneurs, and third-party technology companies,” he said.

The Editors’ Draft is already too much of a compromise for privacy advocates, said Jonathan Mayer, Stanford University law and computer science graduate student and an active participant in the W3C and browser privacy initiatives. Currently, the Editors’ Draft faces more than 20 change proposals from stakeholders that have yet to be resolved (http://bit.ly/12Tpj5L). There’s “a huge amount still to address,” he said. Mayer told us he’s glad the co-chairs rejected the industry proposal “and recognized it as a backtrack from what had been on the table before,” but thinks it “is really tough to see a viable path to consensus” for the group, especially by the end of the month. While Mayer was critical of the industry proposal for the data collection and uses it would have allowed, he said the Editors’ Draft itself “came out of nowhere” and was “never officially adopted by the group” as a compromise between the positions of privacy advocates and the online advertising industry’s positions. “The June Draft is not a consensus document and has drawn particularly firm objections from advertising stakeholders,” he said.

Last week’s stakeholder objections demonstrate how “deeply divided” the group is in its approach to DNT, John Simpson, director of Consumer Watchdog’s Privacy Project, told us. In a statement, Simpson applauded the co-chairs for rejecting the industry proposal. The proposal would have allowed sites to continue to build user profiles and target ads” and “was a sham and made a mockery of the Do Not Track concept,” he said. Simpson told us that, even with the Editors’ Draft, he’s “hard pressed to understand how it’s possible to reach consensus” with such a divided group. The number of objections -- including some from groups that objected to both proposals -- is “a clear indication of how far apart the two groups remain.” Simpson called for online privacy legislation in the event the W3C process doesn’t succeed.

Legislation in the U.S. is not likely if the W3C process doesn’t produce a consensus, Mayer said. “Legislation is not happening” at a state level, even in aggressive states like California, and, “at the federal level, definitely no,” he said. The possibility of legislation or regulation coming out of the EU “is a lot more promising,” he said. Thomas said she’s not concerned about legislative or regulatory efforts being renewed if the W3C process fails because of the power of self-regulatory programs already in existence. Lawmakers and regulators can see “that industry is serious” and “self-regulation is incredibly robust and widespread in its adoption,” she said. “I don’t see a reason for legislation or regulation to move forward.”

Privacy advocates expressed frustration over having to consider the industry proposal at all. Most of the stakeholders “played by the rules” and submitted comments, not new proposals, after Swire requested stakeholder objections to the Editors’ Draft, Simpson said. “Many of us thought [industry representatives] violated the whole process.” Other groups had previously submitted proposed drafts that did not get elevated to the status the industry proposal received last week, Simpson said. “I don’t know why [industry representatives] have gotten the special standing they've received.” Mayer said stakeholders “blew three weeks” talking about a proposal that should have never been considered so seriously. The industry proposal was done in “legitimate and good faith” and not as a last-ditch attempt by industry representatives to manipulate the process, Groman said. Stakeholders had to submit objections “under an extremely short time frame,” and industry representatives responded by submitting its own proposal, rather than submitting a number of individual objections. “That was a very fair and legitimate part of the process,” Groman said.