FTC: Privacy best protected by industry

The Federal Trade Commission indicated Wednesday that it would leave it to data-mining Web companies and Internet marketers to decide how best to protect users' privacy.

“Self-regulation may be the preferable approach for this dynamic marketplace,” Lydia Parnes, the director of the commission's Bureau of Consumer Protection, told a Senate committee.

The FTC's decision not to step in – even as Microsoft and Google representatives testified that some regulation would be helpful – means Washington won't address the matter before a new administration and Congress take office in January.

At issue is what privacy rights consumers have when data-mining companies use their Web browsing patterns to target them for ads. It's a gold mine for online advertising and Internet marketing, but consumer and e-privacy groups say it's intrusive.

NebuAd, a Redwood City, Calif.-based company, has been in the hot seat for partnering with Internet service providers to deliver ads to users' computer screens.

The company's CEO, Bob Dykes, told the Commerce, Science and Transportation Committee that there's no privacy lost in the process.

“NebuAd's systems are designed so that no one, not even the government, can determine the identity of our users,” Dykes said.