Google Buzz settlement called a 'killer' for e-commerce

IDG News Service - The U.S. Federal Trade Commission's proposed settlement with Google over its bungled launch of the Buzz social-networking service could have disastrous effects on the rest of the e-commerce industry, the head of a trade group said.

Privacy groups and some FTC officials are pressing to set the Buzz settlement as an online privacy standard. And one provision of the proposed settlement would be a "real killer" for the rest of the e-commerce industry, said Steve DelBianco, executive director of trade group NetChoice.

The proposed settlement, with public comments due next Monday, requires Google to get "express affirmative consent" from its users for "any new or additional sharing" of personal information with third parties if the new sharing is a change in Google's practices.

This provision, if it becomes an industry standard enforced by the FTC, would require all online businesses to get opt-in permission from customers for minor changes in the way they share information with partners or other businesses, DelBianco said. Opt-in requirements would make it difficult for social-networking and online content sites to roll out new innovations and pay for their free services, he said.

The calls for the settlement to become a privacy standard "can't be allowed to produce side effects for the rest of the industry for something Google did inappropriately," DelBianco said. "If the FTC gets its way and imposes the Google settlement on the entire industry, Google's competitors have to obtain express, affirmative consent before releasing any new features that would just share non-sensitive user data with third-party apps and advertisers."

The opt-in requirement would apply to "any" customer information, not just personally identifiable information, he said. "There's no limit on it," DelBianco said. "Are these material, serious changes? No, 'any' changes."

Getting opt-in permission to share additional user data is "notoriously difficult," especially now, when online users see frequent warnings about online privacy invasions, DelBianco added. "The atmosphere is poisonous right now for obtaining opt-in consent," he said.

The proposed settlement, announced in March, bars Google from future privacy misrepresentations, requires the company to implement a comprehensive privacy program and requires independent privacy audits for the next 20 years. When it launched Buzz in early 2010, Google used personal data from its Gmail product to populate Buzz, without getting permission of Gmail users. In some cases, Google shared personal information with Gmail users' ex-spouses, employers and doctors, the FTC said.

The settlement's opt-in requirement will have little impact on Google, which gets a large portion of its revenue from search-based and display advertising, DelBianco said.

Google "doesn't need to share anything with third parties," he said. "Google's so large of a first party that it can dictate terms to its third parties."