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Study finds Web sites prying less

Shift may reflect consumer concerns, authors say

Study finds Web sites prying less

(CNN) -- A new study of online privacy policies released Wednesday found that Web sites are collecting less personal information from Internet users, either directly or through third-party cookies.

The study, commissioned by the Progress & Freedom Foundation, evaluated the privacy practices of the top 100 e-commerce sites, as well as a random sample of approximately 300 smaller sites, in December 2001.

Foundation officials said the report was designed to update a 2000 report from the Federal Trade Commission that also looked at online privacy.

According to the authors of the new report, "The most surprising finding of this study is that commercial Web sites are, by virtually every measure, collecting less information than they were two years ago. Not only do fewer sites collect [personal identifying information], those that do collect less, and dramatically fewer sites are utilizing third-party cookies."

Ron Plesser, a privacy expert who works with industry-backed groups like the Online Privacy Alliance and the Direct Marketing Association, called the results "very encouraging."

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"This study shows that the industry is getting better," said Plesser. He added that instead of just posting privacy policies, the study demonstrates that companies are now following through on them.

The proportion of the 100 most popular Web sites collecting personal information other than e-mail fell from 96 percent to 84 percent. In the random sample of smaller sites, the proportion fell from 87 percent to 74 percent, the study found.

The most popular sites cut their use of third-party cookies by over one-third. Among the random sample, the drop was even steeper, with the use of such cookies dropping by half.

Chris Hoofnagle, legislative counsel at the Electronic Privacy Information Center, a Washington-based advocacy group, said businesses should be collecting the minimum amount of information necessary.

"The fact that fewer sites are collecting data is a step in the right direction," said Hoofnagle. "But it's not a substitution for legislation giving individuals rights and laws," he added, especially when it comes to sharing any personal information.

Despite an apparent waning interest in Washington over passing new Internet privacy laws, Hoofnagle called on the government to implement tougher measures to protect consumers.

Consumer response?

The authors of the study said the decline could have several explanations. One possibility, they said, is that the marketplace is placing less value on the collection of such information than it did in March 2000, at the height of the dot-com boom.

Marketers also may have cut back on collection practices because of negative reactions from consumers.

But Richard M. Smith, a prominent Internet security and privacy consultant, said less personal information is being gathered because of economic reasons, not because consumers don't like it.

"What this study is really measuring is the collapse of the Internet bubble," said Smith. "Clearly the numbers are going to be down since many third-party companies are now out of business. There are fewer companies collecting the data ... since they never learned how to turn that data into money."

In addition, the study found, Web sites are increasingly providing consumers with more information on privacy policies and practices.

The researchers found that such privacy notices tend to be displayed more prominently than they were two years ago, and contain more thorough information.

However, regardless of any changes in privacy policies, Smith added that being tracked online is a directly proportional relationship: the more someone surfs the Web, the more likely they will be tracked.

Opting options

In addition, more sites are asking Web users to opt-in when they collect personal information, rather than having them opt-out.

"This shift may reflect a market response to consumer concerns about third-party data use, a decline in the market value of data sharing, or both," the authors wrote.

The study also found that nearly one in four of the most popular domains have implemented Platform for Privacy Preferences, known as P3P -- the Internet's version of nutrition labels.

P3P gives visitors a quick sense of how well sites honor users' personal privacy, and offer Web surfers a simpler alternative to the lengthy privacy policies written in hard-to-read legalese.

The Progress & Freedom Foundation hired the accounting firm of Ernst & Young to collect data and audit the numbers for the survey.

The foundation is a nonprofit organization that generally opposes government intervention in the digital world. It receives funding from numerous private and public sources, including many of the nations largest high-tech firms. Among its contributors is AOL Time Warner, the parent company of

-- Sci-Tech Editor Daniel Sieberg contributed to this report.


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