S. HRG. 106±815 PRIVACY IN THE DIGITAL AGE: DISCUSSION OF ISSUES SURROUNDING THE INTERNET HEARING BEFORE THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE ONE HUNDRED SIXTH CONGRESS FIRST SESSION ON PRIVACY ISSUES SURROUNDING THE INTERNET, FOCUSING ON INTER- NET INDUSTRY POLICY, SECURITY, DATA PROTECTION, LAW EN- FORCEMENT, TECHNOLOGY DEVELOPMENT, AND ELECTRONIC COM- MERCE APRIL 21, 1999 Serial No. J±106±19 Printed for the use of the Committee on the Judiciary ( U.S. GOVERNMENT PRINTING OFFICE 68±199 CC WASHINGTON : 2001 VerDate 11-MAY-2000 13:11 Jan 04, 2001 Jkt 000000 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 APRIL21.TXT SJUD2 PsN: SJUD2 COMMITTEE ON THE JUDICIARY ORRIN G. HATCH, Utah, Chairman STROM THURMOND, South Carolina PATRICK J. LEAHY, Vermont CHARLES E. GRASSLEY, Iowa EDWARD M. KENNEDY, Massachusetts ARLEN SPECTER, Pennsylvania JOSEPH R. BIDEN, JR., Delaware JON KYL, Arizona HERBERT KOHL, Wisconsin MIKE DEWINE, Ohio DIANNE FEINSTEIN, California JOHN ASHCROFT, Missouri RUSSELL D. FEINGOLD, Wisconsin SPENCER ABRAHAM, Michigan ROBERT G. TORRICELLI, New Jersey JEFF SESSIONS, Alabama CHARLES E. SCHUMER, New York BOB SMITH, New Hampshire MANUS COONEY, Chief Counsel and Staff Director BRUCE A. COHEN, Minority Chief Counsel (II) VerDate 11-MAY-2000 13:11 Jan 04, 2001 Jkt 000000 PO 00000 Frm 00002 Fmt 0486 Sfmt 0486 APRIL21.TXT SJUD2 PsN: SJUD2 C O N T E N T S STATEMENTS OF COMMITTEE MEMBERS Page Hatch, Hon. Orrin G., U.S. Senator from the State of Utah ................................ 1 Kohl, Hon. Herbert, U.S. Senator from the State of Wisconsin ........................... 3, 4 Leahy, Hon. Patrick J., U.S. Senator from the State of Vermont .......................16, 18 CHRONOLOGICAL LIST OF WITNESSES Panel consisting of Katherine Borsecnik, senior vice president, Strategic Busi- nesses, America Online, Inc., Dulles, VA; Michael Sheridan, vice president, Strategic Businesses, Novell, Inc., Orem, UT; Irving Wladawsky-Berger, general manager, Internet Division, IBM Corp., Washington, DC; Jerry Berman, executive director, Center For Democracy and Technology, Wash- ington, DC; Russell T. Bodoff, senior vice president and chief operating officer, BBBOnline, Inc., Arlington, VA; and Gregory Fischbach, chairman and chief executive officer, Acclaim Entertainment, Glen Cove, NY ............... 7 ALPHABETICAL LIST AND MATERIALS SUBMITTED Berman, Jerry: Testimony .......................................................................................................... 65 Prepared statement .......................................................................................... 67 Bodoff, Russell, T.: Testimony .......................................................................................................... 71 Prepared statement .......................................................................................... 73 Appendix: BBBOnline Privacy Programs, Compliance Assessment Questionnaires and Flow Charts .......................................................... 79 Borsecnik, Katherine: Testimony .......................................................................................................... 7 Prepared statement .......................................................................................... 9 AOL's, Certified Merchants Program ...................................................... 13 Fischbach, Gregory: Testimony .......................................................................................................... 171 Prepared statement .......................................................................................... 172 Sheridan, Michael: Testimony .......................................................................................................... 20 Prepared statement .......................................................................................... 21 Wladawsky-Berger, Irving: Testimony .......................................................................................................... 25 Prepared statement .......................................................................................... 26 Exhibits: IBM's Privacy Practices on the Web ........................................ 34 OPA Whitepaper: Online Consumer Data Privacy in the United States ...................................................................................................... 48 APPENDIX ADDITIONAL SUBMISSIONS FOR THE RECORD Letter to Senators Hatch, Feinstein and Leahy, accompanied by AOL's Terms of Service (which includes the AOL Member Agreement, the AOL Commu- nity Guidelines, and the AOL Privacy Policy), as well as a copy of AOL's guidelines for using ``parental controls'' to protect children online, submitted by Jill Lesser, vice president Domestic Public Policy, America Online, Inc., dated April 23, 1999 ............................................................................................ 207 (III) VerDate 11-MAY-2000 13:11 Jan 04, 2001 Jkt 000000 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 APRIL21.TXT SJUD2 PsN: SJUD2 VerDate 11-MAY-2000 13:11 Jan 04, 2001 Jkt 000000 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 APRIL21.TXT SJUD2 PsN: SJUD2 PRIVACY IN THE DIGITAL AGE: DISCUSSION OF ISSUES SURROUNDING THE INTERNET WEDNESDAY, APRIL 21, 1999 U.S. SENATE, COMMITTEE ON THE JUDICIARY, Washington, DC. The committee met, pursuant to notice, at 10:03 a.m., in room SD±226, Dirksen Senate Office Building, Hon. Orrin G. Hatch (chairman of the committee) presiding. Also present: Senators Thurmond, Leahy, Kohl, Feinstein, and Schumer. OPENING STATEMENT OF HON. ORRIN G. HATCH, A U.S. SENATOR FROM THE STATE OF UTAH The CHAIRMAN. Good morning, and welcome to today's hearing addressing the important and increasingly complicated issue of pri- vacy on the Internet. It has been no secret that throughout my career in the U.S. Sen- ate, I have advocated and sought policies that encourage and foster the development of new and better technologies. Included among them are medical technologies that help to improve the health of Americans and information technologies that bring distance learn- ing to many who live in rural areas in Utah and across the Nation. The Internet's explosive growth promises to impact every aspect of our daily life, as it provides the public with useful and often vital information and literary content immediately at the mere click of a mouse. Internet technology will play an important role in educating the population through distance learning and through the general de- livery of information. The Internet will also continue to play an in- creasingly larger role in our daily entertainment, whether it is through the delivery of movies and music over the Internet or through the ability to play video games with a network of literally millions of players across the globe. During the last session of Congress, I worked with my colleagues on this committee in a bipartisan manner to act on a number of matters aimed at fostering the growth of the Internet and promot- ing a competitive environment in this new digital environment. First, this committee won passage of the Digital Millennium Copyright Act, which put in place the most significant revisions to the U.S. copyright law since the enactment of the 1976 Copyright Act. I consider that one of the most important bills of the whole last session. (1) VerDate 11-MAY-2000 13:11 Jan 04, 2001 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 APRIL21.TXT SJUD2 PsN: SJUD2 2 Second, the Judiciary Committee initiated the still ongoing, thor- ough public examination of important issues affecting competition and innovation in the digital marketplace. In addition, the commit- tee also provided legislative assistance to industry in our national effort to prepare for the Y2K problem by crafting and passing legis- lation to allow businesses and local governments to share Y2K re- mediation information with limited fear of liability. During this session of Congress, I intend to continue working on legislative and oversight efforts that address new policy changes of the Internet and the new digital revolution. Today's hearing is the first this committee has held on the issue of consumer privacy on the Internet. Given the complex nature of this issue and all of the various policy considerations involved, I do not expect this to be our last hearing on this issue. Any revolutionary, paradigm-shifting technology presents govern- ment with new and significant policy changes and challenges. The Internet is no exception. I recently read that earlier in this century there were concerns about the sale of automobiles to the public as it provided crooks with a tool to escape the police. Luckily, we found a way to address this automobile, ``concern.'' It is my hope that we can do the same for any concerns that surround the Inter- net. As Americans spend more of their lives on the Internet, they are more concerned about the ability of Web sites, both government and commercial, to track their, ``digital steps.'' There is no question that in order for the Internet to reach its maximum potential as a viable avenue for transacting commerce, consumers must be as- sured that personally identifiable information that is collected on- line is afforded adequate levels of protection. But the question re- mains how do we best do that. How do we do it without chilling the development of new technologies or the expansion of the mar- ketplace? There have already been over 50 legislative proposals offered this session addressing privacy. I have been skeptical of most proposals to date, as