Define privacy, information privacy, and informed consent and discuss the ways in which the practices of e-commerce companies, particularly the use of advertising networks, threaten people's privacy.
Answer: Privacy is the moral right of individuals to be left alone, free from surveillance or interference from other individuals including the state. Information privacy includes both the right to prohibit certain information from being collected by either governments or businesses and the right to control the use of whatever information is collected about you. The core concept is the control of your own personal information.
Informed consent means that an individual has knowledge of all of the material facts needed to make a rational decision and consent has been given to collect information. In the United States, business firms and government agencies can gather transaction data from the marketplace and use it for other marketing purposes without the informed consent of the individual. In Europe, on the other hand, this is illegal. European businesses can only use transaction data to support the current transaction if they have asked for and received the informed consent of the individual.
Advertising networks are a threat to people's privacy because they collect information about how you use the Web including the sites you visit, the keywords you use in searches and other queries, your online purchases, the click-through ads you respond to, and other information. These advertising networks or "profiling companies," with the permission of the Web sites you visit but not your permission, place cookies on your computer that are used to track your movements as you surf the Web. In addition to this information, they may also compile a profile that contains information that the company infers about you based upon the sites you visit. All of this data is entered into a database and analyzed to create a profile that might include your interests, habits, associations, and inferred personality traits.
Online profiling is a complex subject that is viewed differently by the parties involved. It can consist of only the collection of anonymous transactional data that is used to create targeted advertisements, but it may also involve the merging of click-stream data with personally identifiable information (PII). The advertising networks argue that Web profiling benefits both the consumer and the businesses because consumers will only see ads for products and services in which they are interested. Businesses benefit by not spending unnecessary advertising dollars on consumers who have no interest. Advertising networks and marketers in general argue that with increased advertising efficiency comes more advertising revenues generated to Web firms and the continuing or increased availability of free content on the Internet.
Generally, consumers do not object to data collection related to Internet shopping if they know what information is being collected and can exercise control over how it is used. For example, many Amazon customers have unhesitatingly provided information on their book preferences in order to receive further book recommendations on the site. Consumers are generally concerned over profiling, however, when they either do not expect or consent to data collection. Critics of online profiling believe that it undermines the expectation that people have of anonymity and privacy online and that it inhibits people from exploring sites that deal with sensitive topics or controversial issues. This major issue will have to be addressed, especially the issue of data collection that is concealed from the consumer.