The costs of complying with proposed online privacy legislation could endanger free online content and services currently paid for by advertising and marketing, according to a study supported by the Association for Competitive Technology (ACT). US companies doing business online would pay a hefty price, estimated from $9 billion to $36 billion, to modify their Web sites to comply with proposed privacy laws. Moreover, small businesses would be hit hardest, since they own the great majority of working Web sites. The study, released May 8, 2001, reveals that the access and enforcement provisions in current legislative proposals carry a staggering cost for businesses that collect personal information online.
The study examines how proposed legislation could impact businesses that collect personal information via the Internet, focusing on immediate, direct costs of modifying existing Web sites and their back-end information systems. The study concludes that further regulation of online privacy is premature for three reasons:
- The direct costs of compliance could be substantial.
- Benefits of such regulation have yet to be quantified.
- The market continues to respond to consumer concerns about online privacy.
The proposed privacy laws referred to are the Consumer Privacy Protection Act, the Consumer Internet Privacy Enhancement Act, the Consumer Online Privacy and Disclosure Act, and the Spyware Control and Privacy Protection Act. The full 51-page study is available in PDF format.
