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Senate Leadership Shift Puts Spotlight Back On Privacy

Defection of James Jeffords from GOP shifts leadership of Commerce Committee and makes privacy legislation a bigger priority.
The defection of Sen. James Jeffords (I-Vt.) from the Republican party led to a shift in leadership of the Commerce Committee, which pushed the question of privacy protection from the bottom of the committee's agenda to the top, and makes it likely that one of the 30 or so bills floating around Capitol Hill this summer will actually see the light of day. Still, analysts expect any bill that does make it through Congress will add few rules, beyond requiring Web sites to let consumers "opt out" of the sharing of their personal data.

"It looked like online privacy legislation was dead, but now I'd say there's a 75% chance that a bill will pass," says Giga Information Group analyst James Grady. "The Republicans really appreciate how delicate their balance of power was--and now they'll have to be much more conciliatory, and look for legislation that both sides can support."

That's not to say that a blatant case of misuse of private information might not spur both sides of the Hill into passing a bill with some real teeth in it. A few more cases like Amazon--which recently got a green light from the Federal Trade Commission to change its policy in midstream and insert the right to sell its data--could cause a consumer backlash.

But Reed Freeman, an attorney at the Washington law firm of Collier, Shannon, and Scott, sees a bigger shift coming. While new Commerce Committee chairman Ernest "Fritz" Hollings (D-S.C.) doesn't have the power to push a bill through, he does have the power to stop one--and Hollings is in favor of an opt-in regime. "That's a sea-change in policy, and one that spells trouble for a McCain-type opt-out paradigm, making it through the committee," Freeman says. But even if it does, he acknowledges that it will never pass the Republican-controlled House Commerce Committee, under chairman Billy Tauzin (R-La.).

With Congress not yet confident that it understands the issues involved in E-commerce, it's not likely to impose the huge cost of opt-in programs on Internet businesses. Freeman is betting this summer will bring a congressional commission charged with looking into the cost of privacy protection, rather than legislation. "That's a consumer-friendly initiative everyone can get behind with a straight face, and it's got a groundswell of support," he says. "I'm thinking a privacy commission has the best chance, no legislation has the second-best chance, opt-out is third, and opt-in is simply not happening."