PRIVACY IN THE ONLINE WORLD.

Americans are in love with the Internet.

Three-quarters of Americans under the age of 60 have used the Internet at work or at home, and 72 percent say the Internet has made their lives better. Meanwhile, Americans spent an estimated $15 billion to $20 billion last year shopping online.

At the same time, Americans are becoming increasingly concerned that their privacy is at risk on the Internet. According to a Forrester Research survey of online users, 67 percent said they were "extremely" or "very" concerned about releasing personal information over the Web. Forrester estimates that those fears may have resulted in as much as $2.8 billion in lost sales for Internet retailers in 1999.

Over the last year, the ability of Web sites to collect, combine, analyze and disseminate data has hit the radar screens of the public, government officials, the technology industry and the media in a huge way. Recently, considerable attention has been focused on the privacy practices and policies of many well-known companies, including Microsoft. In Washington, D.C., and in state legislatures, numerous proposals have been introduced to study the range of issues involved in the privacy discussion, or to regulate information practices.

As a New York Times editorial recently noted: "Unless businesses can protect privacy, the erosion of trust could seriously harm e-commerce as well as cause the public to become wary about using the Internet for education, research and other important noncommercial functions."

If that were to occur, it would be a shame, not only for consumers, but also for the high-technology industry.

As Microsoft continues to monitor and improve our own Web practices and policies, we are also committed to developing technologies and tools that will help lead the way in placing power and choice in the hands of consumers regarding the collection and use of their personal information. We are working with government leaders, industry, and nonprofit organizations like getnetwise.org, TRUSTe and BBBOnline to find the best solutions for addressing the public's legitimate concerns. A key component is educating online users and helping them take advantage of current privacy tools and new ones as they are developed.

Microsoft believes that everyone has a right to know how their personal information and their Internet activity is used by the Web sites they visit. This commitment is built within a framework known as Fair Information Practices, which forms the foundation of our collection, storage, use and distribution of customer information. The Fair Information Practices, which are endorsed by the Federal Trade Commission (FTC), privacy advocacy groups and a growing number of technology companies, incorporate five key principles: notice, choice, access, security and enforcement. To encourage other Web site operators to adhere to the Fair Information Practices, Microsoft has established a policy that we will only place corporate advertising on U.S. Web sites that conform to these practices. A growing list of other industry leaders, including IBM, Disney, Novell and Compaq, also have established policies designed to encourage Web businesses to disclose their information management practices.

On the technology front, we have worked with TRUSTe to create a Privacy Wizard that has been used by more than 16,500 Web sites to create privacy statements that comply with the Fair Information Practices. We have launched Kids Passport, a service to help parents manage the information their young children can provide to Web sites, and help online businesses comply with the Children's Online Privacy Protection Act of 1998. We are also working with the World Wide Web Consortium and other technology companies to create an open privacy-enabling standard called P3P. P3P will enable consumers to express their privacy preferences, and allow Web sites to post machine-readable privacy policies that can be interpreted by a consumer's browser. On June 21, in New York, Microsoft participated in the first public demonstration of products based on the emerging P3P standard.

At Microsoft, we recognize that protecting privacy is not only good for consumers; it is also good for the long-term viability of e-commerce. Given the diversity of views on how to tackle these issues, and the rapid pace of innovation and change on the Internet, a consensus view on a one-size-fits-all solution will be difficult to achieve. Working with our partners, others in the industry and with policymakers, however, we are striving to make sure that both consumers and the high-technology industry come out as winners on these challenging issues.

This is one in a series of essays on technology and its impact on society More in formation is available at microsoft.com.