Imagine a newspaper oped with half a dozen fallacies. Such a thing could appear in any newspaper in the US. But now imagine that the author is a Rhodes Scholar and you’re left with the Wall Street Journal’s L. Gordon Crovitz.
For years I’ve followed the bizarre arguments of L. Gordon Crovitz, who has a weekly column on information policy in the Wall Street Journal. It’s part of my daily routine of reading the Journal, which is great for business news but something else for everything else.
Last week, Crovitz wrote a real howler, arguing that the Internet was really created by Xerox, not the government, because among Xerox’s many great inventions was Ethernet. Of course, the Internet is the world’s biggest copying machine, but Xerox itself doesn’t claim to have invented the Internet. A chorus of more well informed people attempted to correct Crovitz, including the author of the book Crovitz relied upon to support his argument, but the damage is already done. The libertarian claque is parroting Crovitz as part of its mission to undermine any of the good deeds done by the government.
Perhaps Crovitz was attempting to cure the largest source of cognitive dissonance for the libertarians: that the libertarians’ favorite invention, the Internet, was funded by the source of all evil, our federal government. This single unfortunate fact may be enough to cure the Manichean mind of the libertarian, and thus it must be attacked.
One column does not completely undermine one’s claim to be an expert in information issues. But Crovitz has a track record of reactionary, inaccurate, and incoherent essays on issues of importance. For example, just the week before, Crovitz made a series of disconnected arguments and inaccurate observations about privacy. Dear reader, let me guide you through the sad times of the Disinformation Age.
The Way the Digital Cookie Crumbles
If regulators and lawyers limit the use of data, advertising online will become less efficient.
Typically, editors write headlines, so we have to give Gordon a pass on this assertion.
For a measure of how technology is changing human expectations, consider the “cookies” on your computers. These invisible text files are how websites track activity, delivering to marketers detailed information about individual behavior and preferences. In exchange for data, we get highly personalized online services.
I’m not sure what an “invisible” text file is. One that is empty? One that your operating system does not allow you to see? In any case, cookies are not invisible to marketers, who are attempting to track our every move online. This fact has been detailed by Crovitz’s own paper in the What They Know series.
Crovitz also engages in a false analogy here, which is more fully developed later. Yes, cookies enable tracking, but what websites choose to do with that data is different based the business model of the site. Some tracking, such as when one shops on Amazon and receives product recommendations, are an example of a personalized service that individuals can choose to enjoy. Most tracking does not deliver personalized services—it attempts to deliver advertising of all sorts. My work shows that when asked, Internet users overwhelmingly reject the value proposition that Crovitz lionizes.
Crovitz goes on to describe an example of differential pricing on the web, where for instance, certain consumers were presented with more expensive products or services because they were Apple users.
When Orbitz used these data to feature higher-priced hotels more prominently in Apple users’ search results, privacy lobbyists claimed outrage. But even in the analog era, readers of this newspaper saw advertisements for different products and services than readers of less high-end papers.
Of course the analog and digital eras are completely different. Contextual advertising (the idea that one places ads consistent with the publication, such as ads for golf balls in a golf magazine) is not privacy invasive at all. In fact, in the analog era, the Journal could not tell whether you even read the newspaper at all—only that you were a subscriber or not. In the digital era, newspapers are designed specifically to encourage the user to click more, so that precise interests can be mapped and advertising dollars maximized. A change to a more information-rich medium may justify a change in privacy rules.
These uses of personal data can seem a bit creepy, but the evidence also shows how quickly consumers have gotten used to being tracked. When given the choice, few consumers opt out of cookies. People accept the benefits of more relevant ads and more personalized websites in exchange for letting marketers track their interests.
This single paragraph demonstrates a complete lack of familiarity with the research that has been done in privacy and is descriptively inaccurate. Marketers complain bitterly about consumers deleting cookies, and research has shown that even popular websites have resorted to hidden and nearly-impossible to avoid tracking to address this consumer rejection.
Crovitz’s larger point, that people do not opt out, is backwards as well. Consumers can get used to a lot of things if those things are hidden from them, and they are offered no real choice about the matter. In reality, consumers think that they are protected by strong privacy laws. My research has shown that consumers mistakenly believe that privacy policies impose strong, legally-enforceable limits on the use of data.
…Consumers are loyal to Amazon in part because of its recommendation tools—if you liked that book, you may like this one—which mine user data to determine relevancy…
Here again, Crovitz does not present an important wrinkle in the privacy debate: first party tracking may be a “feature” that consumers desire. Consumers may use Amazon.com specifically for its recommendations. Research shows that most cookies on popular websites are delivered by third parties, typically companies that track individuals for advertising purposes.
Left alone, people would continue to make their own evolving judgments about how much data to share. Instead, regulators issue edicts. The Federal Trade Commission has extracted 20-year consent decrees from Google, Facebook, Twitter and Myspace, giving regulators broad review over their privacy and data practices. This would be fine if the purpose were to ensure that companies comply with disclosures about how they use data, but the FTC wants to define privacy standards.
And here, the libertarian paranoia emerges in full–regulators have nothing better to do but issue edicts, which are fully untethered from consumers’ desires. Here again the Manichean nature of the libertarian is exposed—regulation is so evil that it has to be spawned by evil people with evil motives.
In reality, American consumers strongly support some definition of privacy standards. No Congressperson has ever lost office for passing a privacy law. The FTC, under Republican leadership, was in fact the progenitor of the most successful privacy edict of all—the Telemarketing Do-Not-Call Registry. The FTC predicted that only about 60 million numbers would be enrolled. Last I checked, over 200 million numbers were enrolled.
The FTC’s consent decrees all flowed from situations where companies made promises that were false or reneged upon. And in each case, the company agreed to the decree—making it a “consent decree.” If these were real edicts, these companies could have litigated them. They don’t litigate them because in the course of a typical investigation triggered by a misrepresentation, the FTC finds lots of other privacy problems.
One result of FTC meddling is that plaintiff lawyers have open invitations to file nuisance suits on behalf of supposed privacy victims. A federal judge is considering a $20 million settlement offer by Facebook, which has agreed to make its disclosures clearer that when users click “Like” to promote a product on Facebook, their names and photos can be used.
The paranoia continues. Plaintiff lawyers file suits regardless of what the government does or doesn’t do. And these cases often result in cy pres remedies, given to organizations (such as Berkeley Law) that work on privacy and information policy.
If regulators and lawyers push too hard to limit the use of cookie data, advertising online will become less efficient. This in turn will reduce the amount of free, advertising-supported services enjoyed by consumers, such as social media, entertainment and email.
I think this argument hints at a core problem in the cookie debate—a false dilemma between a completely unregulated and fully tracked world, and regulation, any of which would kill the golden goose. Of course, there are middle-way approaches.
Crovitz’s argument assumes that online advertising in its current form is the most efficient, but in fact, more privacy-friendly systems may be more efficient. For instance, the DMA claims that telemarketing is now more efficient, perhaps this is because those who didn’t want to buy can opt out.
Crovitz’s false dilemma also shows that he is committed to a certain business model. There are alternative methods for highly-tailored advertising that could be completely private. But these alternatives require more work, and the industry has settled on a lazy approach that prioritizes tracking everyone (even those who opt out) all the time.
…Each consumer should be able to decide how to make this trade-off between sharing data and getting advertising-supported services.
I wonder if Crovitz really means this, because the FTC is considering “Do-Not-Track,” a method that would allow each individual consumer to decide whether or not to be tracked online. So perhaps the FTC is good after all. The industry currently offers no way to take this decision (even if you opt out, they track you).
The privacy debate shows how naive Silicon Valley firms were to sign 20-year agreements granting Washington regulators broad authority over how they operate. Digital entrepreneurs should be allowed to innovate freely, with consumers also free to choose their individual trade-off between how their data are used and the benefits they get in return. Overregulation is the way the digital cookie crumbles.
In other words, Silicon Valley firms were naïve to agree to consent decrees on the advice of the most sophisticated, well-trained lawyers in the world. If they only had Louis Gordon Crovitz, they would have decided differently, and the market would be free at last.