Digital Advertising Alliance

California law requires Internet companies to disclose tracking policies

October 1, 2013: 2:08 PM ET

The state now requires companies to disclose whether they comply with users' wishes to not have their activities tracked. It probably won't do much.

131001135322-do-not-track-620xa-1FORTUNE -- If you were able to tick a box in your browser and stop companies from tracking your online activities, would you do it? You almost certainly would, and that's why Internet companies and privacy groups have been unable to reach an agreement on implementing a national "do not track" standard. Companies and ad networks depend on tracking to make online advertising a valuable proposition. Without tracking and data collection, online ads would be even less valuable than they already are.

On Monday, California Gov. Jerry Brown signed legislation requiring companies to disclose whether and how they comply with the requests of Internet users that they not be tracked.

The law applies only for California Internet users, but nevertheless represents a "small and solid step forward" toward getting a national policy in place after more than two years of steps backward, San Francisco Chronicle columnist James Temple wrote last week. The idea is to hold the companies that don't comply to public account -- in other words, to make them subject to public criticism.

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It likely won't solve the problem, though. Many sites and ad networks will likely see tracking as more valuable to them than their public reputations. After all, when it comes to privacy, even Internet giants like Facebook (FB) and Google (GOOG) have made that calculation before and decided to take the reputational hit. And the fact that Internet companies didn't oppose the California law is a good indication that they aren't much bothered by it. But from the perspective of people concerned about privacy, the public-shaming aspect of the law can't hurt their long-term cause.

Most web browsers now incorporate a "do not track" option that signals their desire to Internet companies. But those companies are not obligated to comply, and until now, they weren't required to say whether they comply. Internet companies and privacy groups have been in talks to create a national standard for more than two years as part of the World Wide Web Consortium (W3C). Just in the past week, those talks stumbled yet again when the Digital Advertising Alliance withdrew.

Privacy advocates want not only full compliance with users' wishes, but also a requirement that Internet companies clearly state whether third parties (ad networks) collect information on users as they traverse the web. That information is then widely sold and shared.

In the end, it might take the force of the federal government (assuming the federal government is still a thing) to get a standard in place. But there is little indication of a desire in Congress or in regulatory bodies to apply such force -- yet another indication that the tech lobby has come of age.

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