Financial News

The US advertising industry moved on Thursday to try to head off the growing threat of legislative action over so-called behavioural targeting, a form of internet advertising that critics complain could violate the privacy of internet users.

The set of self-regulatory principles follows a stark warning from the Federal Trade Commission this year that it would step in if the industry did not take more action to control how websites and advertisers collect and use personal data.

Privacy advocates gave lukewarm support to on Thursday's self-regulation move, which was announced by four US trade associations representing advertisers, advertising agencies and internet companies, and said it might not be enough to prevent legislation.

"There has been a lot of talk about this for years," said Alissa Cooper at the Center for Democracy and Technology. "Now we'll see how well [advertisers] actually implement it."

She said the CDT still believed consumers would be better protected by a broader privacy law, a view echoed by other privacy groups.

In behavioural targeting, advertisers collect information about the browsing habits of internet users, usually by placing a small text file called a cookie on their PCs, then use this to serve up ads based on their perceived interests.

This targeted advertising commands a higher price, but has led to the emergence of large databases of personal information.

The FTC called the self-regulation move "a good first step", although it failed to lay out what further measures would be necessary.

In what is likely to be the biggest change for internet users, the new guidelines call for internet companies to draw users' attention to how their data is being collected, and offer them a chance to opt out of the arrangement.

That should lead to far better disclosure than burying the practice in the fine print of broad privacy policies, Ms Cooper said.

The guidelines also state that internet service providers should not be able to collect information on their users' browsing habits unless they get specific consent, placing stricter limits on a controversial practice.

This "opt-in" condition is likely to make it harder for ISPs and companies that make software for internet access, to track which internet sites people visit.