Defending The Kingdom

The NY Times has an interesting article about targeted advertisements that follow people around the web:

Julie Matlin was tempted by a pair of shoes on Zappos.com. Then the shoes started showing up in ads on other sites she visited.

Then the shoes started to follow her everywhere she went online. An ad for those very shoes showed up on the blog TechCrunch. It popped up again on several other blogs and on Twitpic. It was as if Zappos had unleashed a persistent salesman who wouldn’t take no for an answer.

That sounds creepy. Nobody wants to feel watched while surfing the web — it’s just too much like having your mind read. Perhaps that’s not too worrying when you’re shopping for shoes, but what about when you’re looking for information about that skin rash that won’t go away?

It used to be easy to prevent the problem described by the woman in the Times story, but now there are sneakier ways to track users across websites. Now you need something like this Firefox add-on to thoroughly purge your browser of tracking technologies.

But does anyone really care?

There’s nothing easier than drumming up a bit of indignation for a news story. But does anyone really care about being tracked this way? Sure, all else equal, most of us would pick more privacy rather than less. But the real question is whether anyone is willing to pay for that privacy.

The metaphor of a persistent salesman who won’t take “no” for an answer is an illuminating one. Just as some stores try to attract customers by telling them about their easy-going, non commission-based salespeople, some websites could differentiate themselves from the competition by telling internet users that they won’t install invasive tracking technologies.

We may yet see something like that, but I have my doubts. People like privacy, but they like getting great content and services cheaply, too. Websites that earn extra money by intruding on their customers’ privacy are likely going to outcompete websites that don’t if web user preferences lean more toward getting stuff cheaply than maintaining privacy. There is no easier place for experimentation with business practices than the web, so the dearth of websites that compete on the margin of privacy suggests that there probably isn’t much demand for it.

Government regulation of privacy

Right now, there is a debate at the Economist about whether governments should more heavily regulate online privacy issues. This blog has always been in favour of things that help people protect their privacy, but I have also stressed the importance of considering the costs of doing so. To my ear, government intervention to enhance privacy protections online sounds like forcing internet users to accept a different bundle of cheap content, quality services, and privacy than they currently want.

A quote from the primary proponent of regulation in the Economist debate highlights this:

…it is hard to imagine that the typical internet user can really do much to safeguard their privacy when companies purposefully make it so difficult.

Let’s imagine an (admittedly weird) alternate world where the current Economist debate is about the problem that all brick and mortar stores must be entered via doors that measure a mere 3 feet in height. One of the proponents of government regulation for bigger doors says:

…it is hard to imagine that the typical shopper can really do much to improve their shopping experience when companies purposefully make it so difficult to fit in the entrance.

It’s laughable because we know how easy it would be for stores to install larger doors and capture the customers who are dissatisfied with the doggy door experience. When you realize that privacy is something that can and is bought and sold today just like any other commodity, you have to admit that a lack of concern on the part of businesses when it comes to privacy issues may just mean there is limited demand for it from most consumers’ point of view. And, in fact, it is possible that the current equilibrium is pareto optimal.