Users Cannot Win in a Tech Race with Advertisers - A Q&A with Chris Hoofnagle

By TAP Staff Blogger

Posted on October 23, 2012

Chris Hoofnagle, TAP scholar and director of the Berkeley Center for Law & Technology’s information privacy programs and senior fellow to the Samuelson Law, Technology & Public Policy Clinic, is highly regarded as an information privacy law expert. His latest work focuses on the highly-debated practice of ‘Do Not Track,’ a proposal to give web users the option to limit tracking by advertisers online. We sat down with him last week to discuss the key takeaways from his survey on privacy and modern advertising, as well as the future state of online privacy.

TAP: What led you to the Berkeley Center for Law & Technology?
Chris Hoofnagle: I came to BCLT after six years with the Electronic Privacy Information Center (EPIC), a Washington-based privacy advocacy non-profit. At EPIC, I was most concerned with the rise of private-sector information companies, and how these firms changed the power relationships among individuals, companies and the government. At EPIC, I found that my favorite responsibility was supervising our law student interns. After that realization, it was an easy decision to go to Berkeley Law. Berkeley's students are deeply knowledgeable about technology and critical of the idea that technology is neutral.
TAP: What motivated you to focus on the intersection of privacy and law?
Chris Hoofnagle: I've always been interested in technology, but also skeptical that it brings improvement upon the human condition in all cases. Privacy law is a proxy for addressing a series of anxieties concerning change and the power imbalances that technology can enable. Increasingly, I am skeptical that privacy law can address these imbalances, and that we need to speak about these problems in terms of antitrust law, anti-discrimination law, and reintroduce norms of fiduciary responsibilities in commercial transactions.
TAP: Your latest work is a survey on privacy and modern advertising, specifically on the impasse between advertisers and consumers regarding ‘Do Not Track.’ How would you define ‘Do Not Track’ in a few sentences?
Chris Hoofnagle: ‘Do Not Track’ (DNT) is a proposal to give web users the option to limit tracking by advertisers online. DNT is a relatively narrow proposal, and it is likely to disadvantage third party network trackers, and empower first party trackers, such as Google and Facebook. I do not think DNT is up to the task of addressing the world we are moving into, one in which companies create a unified view of consumer activity both online and off.
TAP: According to your research, Americans “have a low level of knowledge about DNT.” Is this something we should all be more concerned about?
Chris Hoofnagle: I do not think so. Americans, in their role as consumers, are supposed to know all sorts of things. One cannot be well-versed in every consumer matter in the world, and there are much more salient consumer problems, such as safety issues, that are more important to be aware of.
TAP: You mentioned that “some companies have adjusted their tracking mechanisms to make it more difficult for users to avoid tracking.” Is there a way for consumers to block these additional mechanisms themselves?
Chris Hoofnagle: Users cannot win in a technology race with advertisers. The incentives are simply too powerful for companies to track users. The market for privacy-preserving tools is still in its infancy. Still, there are things consumers can do; the problem is that every privacy intervention can interfere with how websites and services function. On the most basic level, one can block third party cookies. This typically does not affect web browsing adversely, however, some authentication mechanisms fail when third party cookies are blocked. There are a number of privacy-preserving plugins that can help. Some of the best are Abine's DoNotTrackPlus, Ghostery and NoScript.

TAP: In your study, you wrote that the Federal Trade Commission (FTC) has considered creating a “Do Not Track” option for the internet. If DNT stops websites from collecting information about the user, how do you see that changing the way companies are able to target online consumers?
Chris Hoofnagle: Online behavioral advertising (OBA) is just one small method of tailoring advertising. I think the next wave of tracking will occur in payments, and this is why Google, Facebook and Apple are so excited about creating payment or wallet mechanisms. These mechanisms are very exciting for consumer protection – the prospective of more competition in payments could bring down fees, which currently are an outlandish hidden tax on transactions. At the same time, it will give these companies a view onto our offline behaviors.   

TAP: What foreseeable problems are there with issues of online privacy, and what measures do you think need to be taken?
Chris Hoofnagle: The cyberlibertarian predictions of a limitless online world of perfect competition are being realized as something completely different – Facebook. We are moving toward an online world that is controlled by just a few very large platform providers, with perfect identification across services. I think we as consumers need to understand that these free services are dependent upon exploiting consumer data, controlling consumer attention, and controlling consumer expectations. 
One way out of this world, perhaps, is to start paying for services with real money. I am a big fan of the principles underlying, and think that we need to understand that free services have costs.  Paying for products helps align interests between the consumer and the firm. This is one reason why I think Apple is structurally a more consumer-friendly firm than Google or Facebook – it has different incentives because Apple users pay real money for its products. 
My current research agenda, with University of Washington Professor Jan Whittington, explores this problem through the lens of transaction cost economics (TCE). TCE sees privacy problems as a form of inefficiency in online exchanges, and helps show why "free" internet services are really packed with costs. Thus, in addition to becoming more willing to pay for services, I think regulators should ban companies like Facebook from calling their services "free." "Free" as a representation to consumers is very powerful, and in regards to many online services, it is also very misleading.
TAP: What is your favorite piece of technology that you own?
Chris Hoofnagle: Indoor plumbing!