BALANCING PRIVACY AND INNOVATION: DOES THE PRESIDENT’S PROPOSAL TIP THE SCALE? HEARING BEFORE THE SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED TWELFTH CONGRESS SECOND SESSION MARCH 29, 2012 Serial No. 112–135 ( Printed for the use of the Committee on Energy and Commerce energycommerce.house.gov U.S. GOVERNMENT PRINTING OFFICE 81–441 PDF WASHINGTON : 2013 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Aug 31 2005 08:26 Jul 09, 2013 Jkt 037690 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 C:\PROGRA~1\WS_FTP\81441.TXT WAYNE COMMITTEE ON ENERGY AND COMMERCE FRED UPTON, Michigan Chairman JOE BARTON, Texas HENRY A. WAXMAN, California Chairman Emeritus Ranking Member CLIFF STEARNS, Florida JOHN D. DINGELL, Michigan ED WHITFIELD, Kentucky Chairman Emeritus JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts JOSEPH R. PITTS, Pennsylvania EDOLPHUS TOWNS, New York MARY BONO MACK, California FRANK PALLONE, JR., New Jersey GREG WALDEN, Oregon BOBBY L. RUSH, Illinois LEE TERRY, Nebraska ANNA G. ESHOO, California MIKE ROGERS, Michigan ELIOT L. ENGEL, New York SUE WILKINS MYRICK, North Carolina GENE GREEN, Texas Vice Chairman DIANA DEGETTE, Colorado JOHN SULLIVAN, Oklahoma LOIS CAPPS, California TIM MURPHY, Pennsylvania MICHAEL F. DOYLE, Pennsylvania MICHAEL C. BURGESS, Texas JANICE D. SCHAKOWSKY, Illinois MARSHA BLACKBURN, Tennessee CHARLES A. GONZALEZ, Texas BRIAN P. BILBRAY, California TAMMY BALDWIN, Wisconsin CHARLES F. BASS, New Hampshire MIKE ROSS, Arkansas PHIL GINGREY, Georgia JIM MATHESON, Utah STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina ROBERT E. LATTA, Ohio JOHN BARROW, Georgia CATHY MCMORRIS RODGERS, Washington DORIS O. MATSUI, California GREGG HARPER, Mississippi DONNA M. CHRISTENSEN, Virgin Islands LEONARD LANCE, New Jersey KATHY CASTOR, Florida BILL CASSIDY, Louisiana JOHN P. SARBANES, Maryland BRETT GUTHRIE, Kentucky PETE OLSON, Texas DAVID B. MCKINLEY, West Virginia CORY GARDNER, Colorado MIKE POMPEO, Kansas ADAM KINZINGER, Illinois H. MORGAN GRIFFITH, Virginia SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE MARY BONO MACK, California Chairman MARSHA BLACKBURN, Tennessee G.K. BUTTERFIELD, North Carolina Vice Chairman Ranking Member CLIFF STEARNS, Florida CHARLES A. GONZALEZ, Texas CHARLES F. BASS, New Hampshire JIM MATHESON, Utah GREGG HARPER, Mississippi JOHN D. DINGELL, Michigan LEONARD LANCE, New Jersey EDOLPHUS TOWNS, New York BILL CASSIDY, Louisiana BOBBY L. RUSH, Illinois BRETT GUTHRIE, Kentucky JANICE D. SCHAKOWSKY, Illinois PETE OLSON, Texas JOHN P. SARBANES, Maryland DAVID B. MCKINLEY, West Virginia HENRY A. WAXMAN, California (ex officio) MIKE POMPEO, Kansas ADAM KINZINGER, Illinois JOE BARTON, Texas FRED UPTON, Michigan (ex officio) (II) VerDate Aug 31 2005 08:26 Jul 09, 2013 Jkt 037690 PO 00000 Frm 00002 Fmt 0486 Sfmt 5904 C:\PROGRA~1\WS_FTP\81441.TXT WAYNE CONTENTS Page Hon. Mary Bono Mack, a Representative in Congress from the State of California, opening statement ............................................................................. 1 Prepared statement .......................................................................................... 4 Hon. G.K. Butterfield, a Representative in Congress from the State of North Carolina, opening statement ............................................................................... 6 Hon. Fred Upton, a Representative in Congress from the State of Michigan, opening statement ................................................................................................ 7 Prepared statement .......................................................................................... 9 Hon. Marsha Blackburn, a Representative in Congress from the State of Tennessee, opening statement ............................................................................ 11 WITNESSES Lawrence E. Strickling, Assistant Secretary for Communication and Informa- tion, Department of Commerce ........................................................................... 12 Prepared statement .......................................................................................... 14 Answers to submitted questions ...................................................................... 200 Jon Leibowitz, Chairman, Federal Trade Commission ........................................ 37 Prepared statement .......................................................................................... 39 Answers to submitted questions ...................................................................... 210 Berin Szoka, President, TechFreedom ................................................................... 91 Prepared statement .......................................................................................... 94 Answers to submitted questions ...................................................................... 216 Jonathan Zuck, President, Association for Competitive Technology ................... 121 Prepared statement .......................................................................................... 123 Answers to submitted questions ...................................................................... 246 Pam Horan, President, Online Publishers Association ........................................ 137 Prepared statement .......................................................................................... 139 Answers to submitted questions ...................................................................... 252 Michael Zaneis, Senior Vice President and General Counsel, Interactive Ad- vertising Bureau ................................................................................................... 146 Prepared statement .......................................................................................... 148 Answers to submitted questions ...................................................................... 256 Justin Brookman, Director, Consumer Privacy, Center for Democracy & Tech- nology .................................................................................................................... 162 Prepared statement .......................................................................................... 164 Answers to submitted questions ...................................................................... 261 SUBMITTED MATERIAL Statement, dated March 29, 2011 [sic], of the Consumer Electronics Associa- tion, submitted by Mrs. Blackburn ..................................................................... 65 Statement, dated March 26, 2012, of Commissioner J. Thomas Rosch, Federal Trade Commission, submitted by Mrs. Bono Mack ........................................... 187 White House report, ‘‘Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy,’’ dated February 2012, submited by Mr. Butterfield 1 ......... Federal Trade Commission report, ‘‘Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers,’’ dated March 2012, submitted by Mr. Butterfield 2 ........................................... 1 The report is available at http://www.whitehouse.gov/sites/default/files/pri- vacy-final.pdf. 2 The report is available at http://www.ftc.gov/os/2012/03/ 120326privacyreport.pdf. (III) VerDate Aug 31 2005 08:26 Jul 09, 2013 Jkt 037690 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 C:\PROGRA~1\WS_FTP\81441.TXT WAYNE VerDate Aug 31 2005 08:26 Jul 09, 2013 Jkt 037690 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 C:\PROGRA~1\WS_FTP\81441.TXT WAYNE BALANCING PRIVACY AND INNOVATION: DOES THE PRESIDENT’S PROPOSAL TIP THE SCALE? THURSDAY, MARCH 29, 2012 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE, MANUFACTURING, AND TRADE, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. The subcommittee met, pursuant to call, at 9:05 a.m., in room 2123, Rayburn House Office Building, Hon. Mary Bono Mack (chairman of the subcommittee) presiding. Members present: Representatives Bono Mack, Blackburn, Stearns, Harper, Lance, Cassidy, Guthrie, Olson, Pompeo, Kinzinger, Barton, Upton (ex officio), Butterfield, Gonzalez, Sar- banes, Waxman (ex officio), and Markey. Staff present: Paige Anderson, Commerce, Manufacturing, and Trade Coordinator; Charlotte Baker, Press Secretary; Michael Beckerman, Deputy Staff Director; Andy Duberstein, Deputy Press Secretary; Kirby Howard, Legislative Clerk; Brian McCullough, Senior Professional Staff Member, Commerce, Manufacturing, and Trade; Gib Mullan, Chief Counsel, Commerce, Manufacturing, and Trade; Shannon Weinberg, Counsel, Commerce, Manufacturing, and Trade; Michelle Ash, Democratic Chief Counsel, Commerce, Manufacturing, and Trade; Felipe Mendoza, Democratic Senior Counsel; and Will Wallace, Democratic Policy Analyst. Mrs. BONO MACK. The subcommittee will now come to order. Good morning. Let me begin by saying thank you and welcome to our distinguished guests, FTC Chairman John Leibowitz and As- sistant Commerce Secretary Lawrence Strickling. I really enjoyed spending time with you recently at the White House, and I hope you both feel the same way about me after your getting grilled today. But seriously, though, you have been great to work with, and at the end of the day, we all want the same thing, to better safeguard consumer privacy. And the