I appeared on NPR’s Diane Rehm Show this morning to participate in an hourlong segment entitled, New Concerns Over Online Privacy. Our panel in the studio included Washington Post Tech Reporter Cecilia Kang and EPIC President Marc Rotenberg, and we were joined on the phone by Congressman Ed Markey, Co-Chair of the Congressional Privacy Caucus, and Stanford researcher, Jonathan Mayer.

I brought the perspective of small business app developers who want to do the right thing and are taking steps to learn about privacy laws and how to comply. I also highlighted the success of the online marketplace in the U.S. having borrowed a page from the TV playbook providing free or low-cost content funded through advertising. However, despite all the positive stories I had to share about the responsible steps the app industry is taking to protect online privacy, our host and every one of the panelists could not move beyond the topic of Google and the negative impact it is having on the privacy discussion.

Congressman Markey criticized the company for a pattern of privacy violations, while the others had choice words for the search giant’s latest controversies – its new privacy policy and having been exposed overriding the anti-tracking preferences of Safari (Apple) browser users. It is understandable that my fellow panelists would focus their attention on these issues given the amount of attention they have attracted, but it underscores the problem faced by small business technology firms. When bad actors continually ignore the law and violate consumer privacy, government feels compelled to step in and impose regulations that are difficult for the entire industry, not merely the lawbreakers.

Marc Rotenberg made the point that the latest transgression is in violation of the FTC’s Google consent decree which included the Commission’s biggest ever privacy penalty. Considerable fines may be levied for violations of the decree, but these penalties have yet to stop Google. The company was fined $500,000,000 last fall for facilitating the sale of illegal and counterfeit prescription drugs in the U.S. But even today, if you type “Vicodin without” on the Google search page it will autofill suggesting “Vicodin without prescriptions” leading to sites selling potentially dangerous counterfeit drugs.

Clearly, the FTC has yet to find where the pain point is for Google. We strongly urge the Commission not to conclude that the only way to fix one company’s problem is to punish the entire industry. Let’s address this problem at its root and avoid the collateral damage that could harm small business innovators who are acting responsibly.

Here is a link to the hour long show, and below are some clips of my thoughts.

Transparency Key for App Developers
Advertising Has Helped Industry Grow
Google’s Bad Behavior Has Led to FTC Action
Unfortunately This is a Pattern of Bad Behavior

Today I will be meeting with mobile app developers as the featured guest at today’s Silicon Valley Apps for Kids meet up. Bill Martin, of SmarTots, will lead a discussion with me about the critical questions of COPPA and Analytics for Kid’s Apps. COPPA is the Children’s Online Privacy Protection Act, a law which the FTC is seeking to update in a way that may pose challenges to app makers.

ACT has been meeting with developers around the country to highlight effective ways to protect mobile privacy. Working with groups like Moms with Apps and PrivacyChoice.org, ACT is working to help developers understand how to update their privacy policies and mobile strategies. These efforts have helped app makers recognize the business practices attracting the attention of federal regulators and to anticipate possible changes in the legal landscape.

ACT has long been working with Congress and the Administration on their efforts to update COPPA. The app marketplace emerged well after the passage of COPPA in 1998, and we fully support the extension of these child privacy protections into the mobile space. We have cautioned regulators, however, about the potential negative consequences from overly broad provisions and continues to work with the FTC to bring a measured clarity to its rules changes.

We’ve been pretty busy in this regard. ACT testified about COPPA at the House Commerce Committee hearing in October, before the Senate Judiciary and Commerce Committee hearings in May, and filed comments with the FTC. Its guidance on mobile privacy issues has been sought by the Administration, the FTC and Congress as Washington considers a variety of ways to address online privacy.

A link for the Silicon Valley Apps for Kids event today is here.

A Neilsen study was just released revealing the extraordinary connection consumers have with their smartphones.  This report is the product of Nielsen’s new Smartphone Analytics program — a valuable new resource that receives data directly from mobile devices providing better accuracy than user surveys.

So what does this new information tell us?  Neilsen reports that Android smartphone users spent an average of 56 minutes-per-day on their apps or the web. That’s more time than most people spend with their families at the dinner table every night!

Neilsen also found Android users spent twice as much time on their apps as the mobile web. This underscores how much smartphone users have embraced the app model.  There are those who suggest the mobile web eliminates the need for apps, but Neilsen suggests consumer comfort level with apps shows no sign of abating.

We also learned through the study that Android users spent 61% of their time on the top fifty apps. Perhaps this is unsurprising given the long attention span required of popular apps like e-readers (Kindle), navigation apps (Trapster and Google maps), and mobile games (Angry Birds).  Some lament that the rest of the 250,000 apps have to fight it out for the remaining 39%.  However, if you extrapolate Neilsen’s findings over last quarter’s global Android shipments, that equates to over 1 billion minutes a day.  It seems like there are enough minutes to go around.

That’s also a lot of eyeballs.  56 minutes of attention nets a lot of advertising dollars on television.  Increasingly, the mobile marketplace is attracting similar ad investment.  With the average paid app costing less than three dollars, advertising helps generate enough income for developers to grow their companies and hire new employees.

But as opportunity abounds in the app marketplace — expected to reach $38 billion in the next four years — we are confronted with an increasingly challenging regulatory environment. Congress and the Administration are poised to implement new laws restricting app use, advertising, and online commerce in ways that could stunt this growth before it ever gets started.

Some of the decision makers in Washington are unaccustomed to hearing from app developers and are pursuing policies that would greatly weaken our incentive to innovate. Legislation intended to protect mobile privacy would actually inhibit our ability to market products and realize the fruits of our labor. An article in Politico Pro summed up the serious challenges app developers face:

App-makers may need to look up from those iPhones, Android and BlackBerry games and other tools they’re developing in order to keep closer watch on Washington, where federal regulators are mulling new ways to protect app users.

Even if Congress does not deliver any new privacy law targeting apps and other online services this year, both lawmakers on Capitol Hill and watchdogs at the FTC are aiming to send a message to small-time developers that federal consumer protection rules apply to them, too.

The FTC has been effectively regulating the app industry, levying severe fines against those with privacy violations. The commission claims it already possesses sufficient enforcement authority to combat problems where they arise without need for new regulations.

The real danger is that Congress intends to legislate against new technology in a nascent industry it has yet to fully comprehend.  Never mind their intent, they see apps as a threat and are unconcerned if new legislation punishes an entire industry of law abiding app makers to address a few bad actors. The app market is growing at breakneck speed, one of the few bright lights in our weakened economy. Now is not the time for Congress to stunt economic growth and job creation with burdensome, unnecessary regulation.