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Tuesday - May 23, 2000

Dot Com Distress

According to ABC News:

"Silicon Valley is famous as the place where new millionaires are made every day, where people pay astronomical sums for what are ordinary homes and where work often resembles play.

But this valley of dreams may be undergoing wrenching and permanent change.

'The old I've got a dot-com business plan and anybody would put money into it is probably permanently over,' says Joe Shoendorf of Accel.

Even before the big stock sell-off that saw so many of Wall Street's Internet high-flyers come crashing down, many dot-com companies were already feeling the pinch from tighter government accounting rules and investor impatience with lack of profits..."

Click here for the full story [Link no longer active] including why many are returning to their old jobs.

FTC Asks for Further Internet Regulation Rights
On Monday, the Federal Trade Commission asked congress to grant it more power to regulate the way personal information can be used that is collected on Websites.

According to the Associated Press, "The commission recommended that lawmakers pass legislation to bolster its ability to oversee online privacy, concluding that the industry has failed to safeguard consumer privacy through self-regulation."

And according to the New York Times, "The nation's consumer protection agency is likely to encounter skepticism from key Republicans and from industry groups about the government's ability to impose regulations without stifling the innovation fueling the new economy."

Online Privacy Legislation Will Break In Two Separate Waves
The battle over Internet privacy will play out in two rounds of legislation -- one in 2001 and another in 2005. According to the new Report "The Internet's Privacy Migraine" from Forrester Research, Inc, this process will take place in three stages: An initial round of legislation focused on Web sites will be passed in 2001; the issue will go into remission from 2002 to 2004; a second, broader round of legislation will be passed in 2005.

"Rising consumer concern, technological advances, and business pressures will make privacy one of the hottest areas of Internet policy debate in the next several years," said Jay Stanley, analyst at Forrester. "The combination of consumers' feelings of irritation and violation, combined with the findings of this week's FTC report and the politics of an election year will put the privacy issue at center stage."

After an excruciating series of fights and compromises, Forrester believes that the first set of legislation will come later next year. The legislation will require Web sites to provide notice of their information practices -- with the FTC retaining authority to take action against those who do not abide by their own policies. It will also require consent for the sharing of data, but that provision is complex, full of large exceptions, and vague in key areas such as the definition of "third party." Industry lobbying will successfully defeat measures that require companies to provide consumers with access to information that has been collected about them.

After quieting down in the wake of the initial legislation, the privacy issue returns to center stage in 2004 as a result of three factors. First, businesses under continuing relentless competitive pressure will increase the power and scope of their information-handling abilities. Second, the privacy issue will spill outward from Web sites to offline data collection as the aggregation of data by marketers and personal information brokers becomes more aggressive. Third, antigovernment conservatives will join anticorporate liberals on the privacy bandwagon, injecting new political life into the privacy issue.

Momentum for a new privacy bill will finally crest in late 2005. Congress will pass sweeping legislation establishing unified privacy principles that apply to the Internet, financial institutions, and medical providers. This legislation will also pre-empt state privacy laws. The measure requires genuine opt-in for the sharing of personal information with third parties, including any business partners and affiliates, consumer access to basic factual data being held by an institution, and severe restrictions on data aggregators akin to those contained in the Fair Credit Reporting Act.


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