Google, AOL and Others Make State Policy Coalition Official

From California to Utah to New York, state legislators regularly propose laws with major implications for the online ad industry. A once-loose collective of companies including Google, Yahoo, AOL and eBay finally incorporated officially this year after four years of collaborating to influence state policy.

The most recent target of the State Privacy and Security Coalition’s efforts is New York Assemblyman Richard Brodsky, sponsor of a bill preventing third parties from using sensitive personally identifiable information for behavioral ad targeting.

The coalition doesn’t like it. A missive sent to the legislator April 7 by the coalition’s lead counsel calls the bill “unnecessary,” and “most likely unconstitutional.” The coalition, which has formed to deal specifically with state policy, would prefer industry self-regulation and “federal initiatives” address behavioral advertising. Among other members, AOL, Facebook, Google, Monster Worldwide and Yahoo, in addition to trade groups the Network Advertising Initiative and NetChoice signed the letter.

Jim Halpert, partner in the communications, e-commerce and privacy practice at law firm DLA Piper, penned that letter. As head counsel for the coalition, he also recently facilitated its incorporation.

“There’s much more state activity than federal activity,” said Halpert. Not only does that create more laws or proposed laws to deal with; the state process moves much faster.

When it comes to the rapid-fire state legislative process, “We share information and mobilize quickly,” said Steve DelBianco, executive director of NetChoice, itself a collective of trade groups and firms dedicated to e-commerce related issues. Now, for instance, some members of the State Privacy and Security Coalition are watching a previously-defeated Illinois bill dealing with online dating that may be resurrected.

According to Halpert, the coalition also includes Verizon, AT&T, Comcast, and organizations such as the Internet Alliance and tech trade association AeA, formerly the American Electronics Association. Many see a gaping hole left in the absence of one company in particular: Microsoft. Some members think by not joining officially, Microsoft aims to differentiate itself as a stalwart when it comes to consumer data privacy. Still, the company has taken part in several coalition discussions as recently as this month, according to one insider.

With Halpert at the helm, coalition members conduct weekly phone calls, and sometimes meet in-person with other members or with state lawmakers to influence legislation involving online privacy and data security, Internet advertising, online child safety, content liability, spam, spyware, and taxation. In conjunction with the coalition, the counsel and his colleagues draft letters to legislators; they also draw up model bills for proposal, hoping to standardize disparate state laws that make compliance difficult.

“We see the coalition’s role as helping state legislatures understand the technology policy area. I think we all recognize the technology environment can be complicated,” said Adam Kovacevich, Google’s senior manager, global communications and public affairs. Google Director of State Public Policy John Burchett is the firm’s primary liaison to the coalition.

Not much has changed or is expected to change with the incorporation. Indeed, members agree the reasoning behind incorporating was mainly logistical. “It’s not like we have a set of rules or anything,” said Will Castleberry, national director of state public policy for coalition member AOL, who called the incorporation “pro forma.”

“It makes it easier to do billing and reporting,” said DelBianco, noting individual member organizations and companies each lobby legislators, which involves time and travel expenditures. “We share costs,” he added. There could be more to it than purely administrative functions, though. “By incorporating the coalition, what Jim Halpert has done is give it a brand, an identity,” continued DelBianco.

When coalition members originally came together about four years ago, they had no collective name, but they knew they opposed anti-spyware legislation introduced in Utah around that time. Utah’s controversial Spyware Control Act “was probably the shot across the bow that made people think about working together in a more systematic way,” said Halpert.

The coalition set its sights on another controversial Utah law more recently. Last year’s Trademark Protection Act, had major implications for search advertising. In the months after the bill passed, firms including AOL, Google, Microsoft, and Yahoo met with Utah state congressmen, pushing for amendments to the bill, which they opposed. Late night committee hearings and meetings in Utah this March resulted in altered legislation Google and others lauded.

But the coalition’s descent upon Salt Lake City left Utah-based 1-800 Contacts seeing red. Regarding the coalition members that influenced Trademark Protection Act amendments, 1-800 Contacts General Counsel Joe Zeidner told ClickZ News, “We’ve felt for a long time that the virtual world hasn�t caught up with the real world on issues of trademark protection and antitrust. The formation of this group and the power they’re exerting feels a lot like the robber barons and the monopolies that created, and ultimately were responsible for the necessity of antitrust and intellectual property protections.”

Some coalition members say 1-800 Contacts was involved originally in crafting the coalition’s response to the Utah trademark law. Halpert called the company’s reaction to the coalition “sour grapes.” He and others suggest the firm has pushed for self-serving laws that wouldn’t necessarily benefit others in the industry or consumers.

“The concern of the Internet advertising members of our Coalition was to avoid idiosyncratic state-by-state regulation of Internet advertising, because it makes running an Internet advertising business very difficult,” said Halpert.