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Former Clinton officials address Net issues

Ira Magaziner and Christine Varney still toe the White House line that industry, not lawmakers, should make Net rules.

SAN FRANCISCO--Although they've left the Clinton administration, former officials Ira Magaziner and Christine Varney still toe the White House line that when it comes to making rules for the Net: Industry, not lawmakers, should lead the way.

And there is good reason these veterans remain proponents of industry self-regulation when it comes to protecting online privacy and other issues--they too can benefit from the Internet economy.

Magaziner, who was senior adviser to the president on e-commerce issues until last month, and Varney, who resigned from the Federal Trade Commission in Hear CNET Radio coverage of the ICC forum August, met with the press here today to discuss the state of Net policy and what can be expected next year.

Fresh from leaving his post, Magaziner said he has returned to business strategy consulting, but that he is not working with Internet companies--yet.

"I'm still formulating what my plans will be," he said during a press conference at Ziff-Davis's headquarters just before the Internet Content Coalition (ICC) forum on the regulatory issues facing editorial Web sites.

"It's preferable not to make plans while you're [still at the White House] because that could be perceived as a conflict of interest," he added.

Varney is now head of Hogan & Hartson Internet practice, representing clients such as Netscape Communications, the Online Privacy Alliance and the ICC, whose members include the New York Times, MSNBC, Playboy Enterprises, and publisher CNET: The Computer Network.

There is no doubt Varney's immediate life after the White House is riding on the success of e-commerce. Although it remains to be seen if Magaziner will draw his future earnings from the Net economy, both former officials maintained that voluntary industry guidelines--not legislation--is the best way to protect consumers' personal information on the Net.

When Varney was an FTC commissioner, she hammered on the nascent online industry for failing to post and abide by privacy policies that gave consumers control over the use of private data such as their name, address, habits, and financial information. She said then that the FTC had the authority to crack down on companies that did otherwise. Now through the Online Privacy Alliance she is helping those companies try to stave off regulation by adopting and enforcing fair information practices.

Varney pointed to See related roundup: 
FTC's privacy crackdown the surge in online shopping this season as proof that consumers are beginning to trust the Net, noting that data collection practices by members of the Online Privacy Alliance must be helping to encourage consumer e-commerce.

Congress could regulate the collection of financial and medical data, but a new series of issues will emerge this year, she said.

"The businesses in the industry that engage in [responsible privacy] practices?will capture a good part of the business," Varney said. "But people who had problems shopping are going to let their Congress members know they had problems."

Problems such as forged goods or online products that were paid for but never delivered will be the hot issues next year, she said.

Another issue leftover from Magaziner's tenure is the conflict between the United States and a strict European Union privacy directive that went into effect in October and is expected to be adopted by all 15 members of the union.

The EU law will give citizens new control over their personal data and prevent database-marketing firms, Web sites, credit card companies, medical firms, and others from exchanging personal data with countries that do not provide "adequate" protection of the data.

To prevent U.S. companies' data transfers from being cut off by the EU, the Clinton administration has proposed safe harbors that would allow firms to continue exchanging data if the companies voluntarily comply with basic principles, such as notifying people of their data-collection practices, letting people "opt out" of giving up their personal information, and making clear who else will have access to the data.

The safe harbor proposal mimics many of the self-regulatory privacy guidelines already in place by many e-commerce Web sites. But EU officials have said they are still concerned the United States' plan doesn't guarantee people's access to their data and may not have the same weight of enforcement as the EU countries that will have a privacy commission to deal with complaints and noncompliance.

Magaziner said he was confident the European Union will soon see the fruition of successful industry privacy programs such as TRUSTe, which accredits Web sites' privacy policies and monitors them for enforcement.

"The difference in opinion is not about sustenance. The disagreement is about the [best] way to enforce," Magaziner said. "I believe industry self-regulation can work and we can go to them and say, 'This is what is happening.' We'll get there first, before they have government laws in place."