The FTC Takes on the Privacy v. Price Conundrum in Online Media

Yesterday, I wrote about what I think is one of the central cruxes of making streaming video profitable: whether we’re willing to give content distributors more data about us and permission to distribute more of it to advertisers in order to make streaming more profitable and potentially cheaper for us. Turns out the Federal Trade Commission is considering exactly the same challenge in its report laying our recommendations to businesses and policymakers about protecting consumer privacy while satisfying consumer desires in an age when technology is undergoing rapid change. A key section:

Many commenters expressed support for the general principle that companies should limit the information they collect from consumers. Despite the broad support for the concept, however, many companies argued for a flexible approach based on concerns that allowing companies to collect data only for existing business needs would harm innovation and deny consumers new products and services. One commenter cited Netflix’s video recommendation feature as an example of how secondary uses of data can create consumer benefits. The commenter noted that Netflix originally collected information about subscribers’ movie preferences in order to send the specific videos requested, but later used this information as the foundation for generating personalized recommendations to its subscribers.

In addition, commenters raised concerns about who decides what a “specific business purpose” is. For example, one purpose for collecting data is to sell it to third parties in order to monetize a service and provide it to consumers for free. Would collecting data for this purpose be a specific business purpose? If not, is the only alternative to charge consumers for the service, and would this result be better for consumers?

The FTC lays out a very basic principal from these challenges, the idea that “Companies do not need to provide choice before collecting and using consumer
data for practices that are consistent with the context of the transaction or the company’s relationship with the consumer, or are required or specifically authorized by law.” But we’re a long way from defining “consistent with the context of the transaction.” And consent and will are not necessarily among the things companies can grok about us from the data they’re gathering.