Like all revolutions, the Internet revolution has a dark side. Along with online shopping and stock trading with the click of a mouse, the Web has brought an invasion of its users’ privacy that only Big Brother could love.
And no longer is the threat a futuristic one. DoubleClick, an Internet advertising network based in New York, has compiled 100 terabytes of data on more than 100 million Web users’ habits. In February, the company announced that it was backing away from plans to link personal identities and other information gathered from the offline world to databases containing Web- browsing habits. DoubleClick shelved the idea only after a public scolding by privacy advocates, a probe by the Federal Trade Commission (FTC), and a lawsuit by the state of Michigan.
Indeed, privacy is quickly becoming a subject of debate for just about every company with a Web site. And the battle is just beginning. New data- gathering technologies and more-aggressive companies continue to push the limits of privacy on the Net. While E-commerce increases the ability to target specific customers, the mountain of data Internet sites collect could also be valuable to employers, insurance companies, and nosy neighbors.
At stake, of course, is consumer trust. Large E-commerce companies such as Amazon.com and Ebay Inc. fear that a few highly publicized breaches of online privacy could scare away customers. But even more than that, Internet companies fear that if they cannot impose self-regulation, the government is likely to step in. “Government intervention is the last thing business wants,” says Russ Bodoff, senior vice president of BBB Online, a privacy auditor based in Arlington, Virginia. “Restrictive legislation could retard the development of technology and slow the growth of electronic commerce.”
Little wonder that last March, at a financial summit at Boston College, IBM Corp. CEO Louis Gerstner called on every executive in the country to personally “inspect his or her company’s privacy policies [to] find out where they stand, and get on with it.” So far, said Gerstner, “our partners in government have been very patient on this one.”
Maintaining that patience, however, demands finance’s attention, says Frank Siskowski, CFO of E-Loan, an online provider of consumer loans, based in Dublin, California. “I see privacy as an integral piece of the fabric of our internal controls,” he says. “All CFOs have to be involved.” C. Andrew Johns, CFO of 24/7 Media Inc., an interactive media and technology firm based in New York, agrees. “It’s the CFO’s role to make sure that all the company’s practices stand up to public scrutiny. Ensuring good privacy practices is certainly a key part of that,” he says.
There’s been plenty of scrutiny lately in the wake of a number of privacy missteps, both on the Internet and off.
In January, ZapMe Corp., a San Ramon, California-based firm that provides free Internet access and equipment to schools in exchange for providing advertising to students, was accused of helping advertisers collect the names and addresses of minors for marketing purposes without parental consent.