[FYI] (Fwd) FC: Privacy laws could cost U.S. firms over $30 billion,

["Axel H Horns" <horns@ipjur.com>]

------- Forwarded message follows -------
Date sent:      	Tue, 8 May 2001 11:34:48 -0400
From:           	Declan McCullagh <declan@well.com>
To:             	politech@politechbot.com
Subject:        	FC: Privacy laws could cost U.S. firms over $30 billion, study says
Send reply to:  	declan@well.com


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The study:
http://www.actonline.org/press_room/releases/050801summary.asp
News coverage:
http://interactive.wsj.com/articles/SB989273081791113183.htm

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http://www.actonline.org/press_room/releases/050801.asp


   FOR IMMEDIATE RELEASE
   Tuesday, May 8, 2001
   For more information, contact:
   Vince Sampson

   (202) 331-2130 x103
   vsampson@ACTonline.org

    Analysis of Internet Privacy Regulation Says Costs Could Exceed
    $30
                                  Billion

   WASHINGTON, D.C.   U.S. companies doing business online would pay a
   hefty price, estimated from $9 billion to $36 billion, to modify
   their websites to comply with proposed privacy laws.  Moreover,
   small businesses would be hit hardest, since they own the great
   majority of working websites.  The study, to be released on Tuesday
   May 8, reveals that the access and enforcement provisions in
   current legislative proposals carry a staggering cost for
   businesses that collect personal information online.

   The study concludes that further regulation of online privacy is
   premature, for three reasons:

   The direct costs of compliance could be substantial.

   Benefits of such regulation have yet to be quantified.

   The market continues to respond to consumer concerns about online
   privacy.

   The study examines how proposed legislation could impact businesses
   that collect personal information via the Internet, focusing on
   immediate, direct costs of modifying existing websites and their
   back-end information systems.

   The study was authored by Robert W. Hahn, Director of the
   AEI-Brookings Joint Center for Regulatory Studies, Resident Scholar
   at the American Enterprise Institute, and Research Associate at
   Harvard University.  The Association for Competitive Technology
   (ACT) supported this research effort.

   Using what I believe to be fairly conservative assumptions, I find
   that these costs easily could be in the billions, if not tens of
   billions of dollars. This fact alone suggests that proposed
   regulations that would flow from these laws could have a
   substantial economic impact on consumers and businesses, Mr. Hahn
   concluded.

   "Our economy is at a fragile juncture, and we're counting on the
   information technology industry to pull us through. In a market
   where cash and labor are scarce commodities, shortsighted privacy
   regulations will lead to fewer choices and higher prices for
   consumers, said Jonathan Zuck, President of ACT.

   Its ironic that the Law of Unintended Consequences applies
   especially to the unintended consequences of laws. Let's just make
   sure we get it right, and not unduly penalize the online economy,"
   added Zuck.  These direct costs, coupled with an Opt-In
   requirement, could endanger free online content and services that
   are paid for by targeted advertising and marketing, he added.

   The study was released in Washington, DC today, where ACT member
   companies met with over 25 Congressional offices and Administration
   officials to talk about the impact privacy legislation could have
   on their businesses.

   ACT is a national education and advocacy group for the technology
   industry. Representing mostly small- and mid-sized companies, ACT
   is the industry's strongest voice when it comes to preserving
   competition and innovation in the high tech sector. ACT's members
   span the industry, including software developers, systems
   integrators, IT consulting and training firms, and dot-coms.

                                   -30-

     _________________________________________________________________



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