By Joseph Menn

SAN FRANCISCO Feb 19 (Reuters) – Revelations last
week that Google Inc, Twitter and other popular
Internet companies have been taking liberties with customer data
have prompted criticism from privacy advocates and lawmakers,
along with apologies from the companies.

They are the latest in a long line of missteps by large
Internet companies that have faced little punishment for pushing
privacy boundaries, which are already more expansive than most
consumers understand.

Despite all the chatter about online privacy and the regular
introductions of proposed data protection laws in Congress,
Silicon Valley is in the midst of a veritable arms race of
personal data collection that is intensifying.

Many innovative companies, most prominently Facebook, base
virtually all of their services on the ability to personalize,
which requires them to know their users well. Their business
models likewise depend to an increasing degree on the ability to
target a banner advertisement or other marketing pitch to an
individual. Millions of times each day, the right to advertise
to a specific user is auctioned off in a fraction of a second by
computers talking to one another.

For both the buyers and the sellers of the advertising, the
business advantage goes to the participant with the most
knowledge, and that race is driving companies like Google to
learn as much about its users as Facebook does.

Few U.S. laws prevent those companies and others from
collecting all manner of information – ranging from credit cards
numbers and real names and addresses to buying patterns and Web
surfing habits – then selling the data to advertisers and other
third parties.

“Companies are feeling along in the dark, trying to figure
out how to serve consumers with cool new toys and while
protecting consumer interests,” said Jim Harper, a privacy
policy specialist at the libertarian Cato Institute. “More often
than not, they fall in love with their cool new toys and forget
the privacy interests.”

Aside from special protections for credit report
information, medical records and a few other narrow categories,
virtually anything is fair game.

Companies generally face legal threats or a user backlash
only after violating their own published privacy policies or
being discovered subverting consumer wishes.

Twitter, Path and other firms were recently found to be
vacuuming users’ iPhone contact lists even though Apple Inc’s
policies forbade it. On Friday, a Wall Street Journal
report showed that Google was tweaking ads on Apple’s Safari Web
browser to install tracking cookies which, while commonplace on
other browsers, are blocked on Safari unless the user
specifically allows them.

Reps. Edward J. Markey (D-Mass.) and Joe Barton (R-Texas),
co-chairmen of the Congressional Privacy Caucus asked for a
Google probe by the Federal Trade Commission, which declined to
comment. Google said Friday that its intentions were innocuous
but it nontheless dropped the practice. Twitter and Path said
they would seek explicit permission before grabbing address-book
contents, and Apple said it would update its software to prevent
further leaks.

PROMISES, PROMISES

The developments fit what is by now a well-established
pattern that has thus far kept major new laws off the books,
longtime policy specialists said.

A company over-reaches, gets caught, and promises to do
better. If a greater than usual display of outrage prompts
introduction of plausible legislation, the industry counters
with a new plan for self-regulation, such as the publication of
privacy policies that users seldom read.

Sooner or later, the plan is rendered obsolete by new
technologies in the data arms race, and the cycle repeats.

Google and Facebook last year both agreed to 20 years of
privacy audits by the Federal Trade Commission after they made
public customer information that users had considered private.
But with few restrictions on data collection, the audits are not
likely to have a major impact on business practices.

Internet companies and their investors argue that
data-collection is essential to their businesses, and enables
them to provide services that would otherwise be impossible.
Consumers get more accurate search results, more relevant
advertising, and more intimate connections with friends and
others when Internet companies know something about them.

“For that value tradeoff, they’re willing to provide
information,” said Ron Conway, a well-known Internet investor.

“I don’t like people tracking my location, but I want to
know, ‘what are some nearby Italian restaurants that my friends
have liked,’” said Auren Hoffman, CEO of Rapleaf, which compiles
profiles of Internet users.

The equation is different in Europe, which has long-standing
data protection laws that limit some practices that are standard
in the United States. The European Union is now weighing updated
rules that would allow any resident to ask companies to delete
the information on file about them; the United States only has
equivalent rights for those under age 13.

Privacy advocates in the United States say they do not
expect big changes anytime soon.

“Trying to pass a bill through Congress that’s actually
going to safeguard user records, especially when you’ve got huge
advertiser lobbies trying to defang that law, is an incredible
challenge,” said Rainey Reitman, activism director with the
Electronic Frontier Foundation.

At best, they say, a law might allow consumers to opt out of
some tracking.

“That is more likely today than it was 24 hours ago,” said
Justin Brookman, director of consumer privacy at the Center for
Democracy & Technology, which gets funding from foundations and
major technology companies.

“But the ‘right-to-be forgotten,’ erase-button thing, you
would see more of a fight.”

Panasonic’s oddly named Eluga smartphone will be just one of at least two Android smartphones the company brings to Mobile World Congress it has confirmed, ahead of more ambitious consumer tablet plans in 2012. The company had never been shy about its European ambitions for the next three to four years – aiming for 1.5m sales in Europe this year alone – and there will be at least two devices to help carve out a place in the Android marketplace, Panasonic told Pocket-lint. However, details on the second phone are limited.

The second Panasonic handset will be a more premium option than the revealed Eluga, with a larger display that apparently uses the company’s own screen technology rather than OLED. Exactly which tech that might be is unspecified, but Panasonic has been using IPS Alpha panels in its recent HDTVs, produced by its subsidiary Panasonic Liquid Crystal Display Co., Ltd. Those promise broader viewing angles, far better contrast ratios and reduced jaggies on faster-moving content, and we certainly wouldn’t argue with a smartphone-scale version.

Otherwise, there’ll be a front-facing camera and a dual-core processor of unspecified providence. The Eluga has a 4.3-inch screen and a 1GHz dual-core Texas Instruments OMAP 4430 processor, so the second Panasonic looks set to be quite the pocket-dominating speed demon.

As for the tablet, Panasonic says it will be distinct from the ToughBook slates of 2011, with a resolute consumer focus. Again, no specific hardware details at this stage, though Panasonic may preview the new model at MWC next week.

Update: TechTV101 coaxed a few extra tidbits out of Panasonic, namely that there would be three new smartphones at MWC next week, and that we might see some of the company’s LUMIX digital camera tech show up in one or more of the phones.