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Government may agree to voluntary privacy rules

Executives from the leading online ad-servers, including DoubleClick and Engage, are working with the federal government to write voluntary rules to protect Net users' privacy.

The developing online advertising industry is heading toward an agreement with federal regulators for voluntary rules to protect the privacy of people using the Net.

Executives from leading online ad-servers, including DoubleClick and Engage, are appearing before Congress today to address ways their companies can safeguard consumers' privacy.

Industry and government sources said negotiations are proceeding, but a deal is at least a month away.

Developments in the negotiations include a potential commitment by the Network Advertising Initiative (NAI), an industry trade group, to improve the way privacy notices are posted on Web sites. The notices, which tend to be difficult to understand, will be written in more accessible language and posted prominently, according to Engage spokeswoman Kathleen Kreis.

The NAI will also have a page on its site that links to the "opt-out" pages of the companies in its network, including Engage, 24/7 Media and DoubleClick.

"The page will be called something like the 'Consumers' Choice' page," Kreis said. "Each company will have a brief description of their privacy and data-collection policies and a link to their opt-out page."

Kreis said that each company collects different kinds of data--from anonymous information to some that identifies people.

"In order for consumers to make the proper choice, (the NAI members) felt that it was imperative that they not have a global opt-out," Kreis said.

At the center of the privacy storm is advertisers' use of "cookies," which are placed on surfers' computers to track them across the Internet. Advertisers say cookies are useful in keeping track of preferences and making it more convenient to surf the Web, but privacy advocates say they are too easily corrupted.

Cookies can perform a host of other functions, such as instructing Web sites not to collect data Security, privacy issues make Net users uneasy about specific people.

The hue and cry over privacy has clouded the near-term stock outlook for online advertisers. DoubleClick is trading in the low $40s after hitting a 52-week high of about $135. Engage is suffering a similar fate, trading around $15 after reaching a 52-week high of about $94.

Hoping to put the uproar to rest, advertisers are pushing for self-regulated privacy policies. Last month, DoubleClick appointed seven new members to its recently created Privacy Advisory Board, its latest effort to refurbish its image amid criticism from consumer groups and regulators.