Last week, U.S. Sen. John D. Rockefeller introduced an online “do not track” privacy bill that would give consumers the ability to block companies from tracking their digital activity. Gripes, groans and rants can still be heard rippling through pools of Web companies and marketing professionals as the proposed law already has the endorsement of several major consumer advocacy and privacy groups.

Developing Online Privacy

The legislation, called “Do-Not-Track Online Act of 2011,” works off of recommendations by the Federal Trade Commission. Specifically, the bill would require online companies to honor a consumer's choice to not be tracked online. It would also require user information to either be destroyed or made anonymous, and would put the FTC in charge of enforcement of companies that violate the law. 

To say the bill comes at a sensitive time would be an understatement. A hacker attack on Sony PlayStation data and the infamous logging of user location information on Apple’s iPhone and Google Android devices certainly haven't helped the opposing team, for example. 

“Consumers have a right to know when and how their personal and sensitive information is being used online—and most importantly to be able to say ‘no thanks’ when companies seek to gather that information without their approval,” said Rockefeller.

Fighting the Fight

On the other side of the fence sit companies such as Google, Yahoo, and Facebook, who have each opposed similar legislation in California. The main argument is that a blanket opt-out would hinder innovation as the ability to individually tailor services for customers would be kaput.

Steve Minichini, president of interactive at media agency TargetCast stated that the industry is "policing itself" and the government shouldn't try to dictate how to handle consumer preferences.

What Minchini is referring to, of course, is the individual implementation of do-not-track options. Google, Mozilla and Microsoft, for example, have each integrated a browser-based feature; however, there's no requirement of companies to comply with user preferences, making these features relatively ineffective. 

In the end, too many see giving the agency and states’ attorneys general the authority to impose civil penalties against the companies who violate the rules as top priority. 

The White House is included in the list of supporters, as Reps. Ed Markey (D-Mass) and Joe Barton (R-Tex.) announced in April. 

What's Next?

The disruption this will cause online marketing, and location-based services in particular, is catastrophic.

Steve DelBianco, executive director of NetChoice, a trade group that represents Web firms including AOL, eBay and Expedia, spoke for the opposing team when he said: "I've asked for a waiver of Senate ethics rules so I can give Sen. Rockefeller a gift he really needs - an iPad. The senator can see for himself how interest tracking lets advertisers pay for all those free apps and Web services that regular Americans love to use."

Any thoughts on how to online companies can survive the blow? Let us know in the comment section below.