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Online Advertising, Identity and Privacy


Randal C. Picker


University of Chicago - Law School

June 29, 2009

U of Chicago Law & Economics, Olin Working Paper No. 475

Abstract:     
For individuals, the basic architecture of computing is changing. That is obviously about the device itself, with the desktop or laptop computer now being supplemented with other computing devices such as the smartphone and the netbook. That switch, coupled with ubiquitous wireless access, means that many people have access to computing power whenever and wherever.

The way in which we use these devices has changed. We have switched from the freestanding world of the desktop computer and the next stage of surfing the Internet net to consume provided content to a world in which users interact with each other. This is the world of Web 2.0, the world of Google, Facebook and Twitter. This is not just a change in use, but also a change in the organization of computing power and storage, cloud-computing in phrase.

This is also a world of identity, often direct actual real me, on Facebook and Twitter; an authenticated identity to access my data stored in the cloud when I use Google Reader or Gmail or another cloud-based mail service; and a browser-identity when I use a search service. And this is also a world of advertising. Web 2.0 and cloud-computing services are often free to individuals, but they have to be paid for somehow, at that is usually through advertising. Advertising is also increasingly important in a world in which the integrity of the copy itself has weakened and the copy may no longer serve as a reliable means of organizing payment for content.

This combination of identity and advertising means that this will be targeted advertising, that is, advertising directed to some version of me, perhaps actual me as Facebook sees me or browser-me as Google sees me. Regulators are now confronting this intersection of commerce and identity. Individuals have a real interest in seeing targeted advertising work. That advertising supports the free services and content that we have all come to expect on the Internet. But individuals also have a strong interest in controlling their identities.

Regulators, especially in the European Union, are moving towards what they regard as "privacy friendly" default settings for information tracking by Web 2.0 providers. To date, default settings have usually put the burden on individuals to opt out of information tracking. An EU privacy-friendly approach would seem to reject that. But Web 2.0 providers and cloud-providers have strong tools for inducing opt in and, indeed, their ability to provide different levels of their services for different individuals should make it possible for them to assess quite carefully what it takes to get individuals to opt in to targeted advertising. So long as those service providers are not blocked from providing different levels of service to individuals who have not elected to receive targeted advertising, moving towards the EU's privacy-friendly defaults may have the virtue of pushing us away from an often not-so-meaningful default opt in towards more meaningfully calibrated opt ins exchanged for higher quality services, such as seeing fewer, better matched ads.

Number of Pages in PDF File: 49

Keywords: Google, Facebook, Twitter, privacy, identity, targeted advertising, behavioral advertising

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Date posted: July 1, 2009  

Suggested Citation

Picker, Randal C., Online Advertising, Identity and Privacy (June 29, 2009). U of Chicago Law & Economics, Olin Working Paper No. 475. Available at SSRN: http://ssrn.com/abstract=1428065 or http://dx.doi.org/10.2139/ssrn.1428065

Contact Information

Randal C. Picker (Contact Author)
University of Chicago - Law School ( email )
1111 E. 60th St.
Chicago, IL 60637
United States
773-702-0864 (Phone)
HOME PAGE: http://www.law.uchicago.edu/Picker/
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