Information & Ethics Committee on Oct. 16th, 2012

[The Chair, NDP, Pierre-Luc Dusseault]

Mr. Carmichael, you're out of time.

I will hand the floor over to Mr. Angus for five minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

Thank you, gentlemen. This has been a fascinating discussion.

I think we certainly agree, Mr. Elder, we are just on the cusp of the change in the market, in democratization, in innovation from new media. I think we are all committed as a committee to try to find a way to ensure that innovation continues. The question is what happens when the breaches occur, because we're not talking about niceties in these breaches. We're talking issues of identify theft, victimization, and breaches of law and international law. There are serious issues. However, if we step in where we as legislators don't know where we're going, we could seriously impact the development of all manner of ideas and marketing.

I'm very pleased that your marketing organization has a code of ethics. What's interesting is the democratization of business as well. It seems now that the big players are having to adapt and be like small players, because new media favours small start-ups. It favours people who would never have been able to put their ads in a newspaper before. They use Twitter, Facebook, Tumblr, anything else. Now the big guys are having to play with small players, and I think that's fascinating.

Mr. Elder, you say status quo, but then what about the outliers? Should there not be, through the Privacy Commissioner, the tools to ensure that there's predictability in the market so that your guys play by the rules, but for the ones that don't there's a way we can bring them to heel?

[David Elder]

There's a way now. We already have a situation where things can be investigated by the Privacy Commissioner. She can make a report of findings. She can decide, or the complainant can decide to bring that matter before the Federal Court. The Federal Court can issue any order, including injunctive relief or awards of damages.

[Charlie Angus, NDP, Timmins—James Bay, ON]

We've heard from the Privacy Commissioner and from many others. PIPEDA has played a role. The world has looked to PIPEDA. They're saying the lack of administrative monetary penalties is now starting to catch up to us because everything else is moving so fast.

Would you support her ability to bring in administrative monetary penalties? Your organization is playing by the rules but there are people out there who aren't.

[David Elder]

Again, as I said earlier, I think when you give an ombudsman, an investigative body, the power to also order fines, that fundamentally changes the balance and you have someone become investigator, judge, and jury. That would be to the detriment of what for the most part is an open and fruitful dialogue on privacy issues between the Privacy Commissioner's office and the business community. Routinely now when companies are introducing a new service or feature or technology they call up the Privacy Commissioner's office and give her a briefing. I cannot guarantee, but I would predict that in a different model we'd see an awful lot less of that.

[Charlie Angus, NDP, Timmins—James Bay, ON]

That's interesting. I wonder if we're dealing with a false dichotomy between innovation and rules because we need predictability. Right now what we're dealing with is like the wild west out there. It's leading to a lot of great things, but the damages or the threat is certainly there. The question is how do we achieve that?

Mr. Zushman, you suggest Parliament. Would you not agree that the Privacy Commissioner is better equipped to stay on top of this than having us sit around in a room here, hearing about the facts a year or two later, trying to come up with legislation, trying to cobble the pieces together? If the Privacy Commissioner were given the tools that she or he needed at the time, we would be able to stay in the game without unnecessarily interfering with its development. Would you suggest that the Privacy Commissioner should have administrative monetary penalties?

[Jason Zushman]

Yes, Mr. Angus, I appreciate your classification of dichotomy. I do think that the Privacy Commissioner deals with these issues every day. I think the deference that could be given to the Privacy Commissioner's ability to solve these matters would be inside her area of expertise. I would be in support of monetary penalties by way of her discretion, after a full and final resolution and canvass of the issues that she would deem appropriate to be investigated had concluded. I would agree with you.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Quickly, Mr. Péladeau, and following on the same line, when we don't have clear rules and penalties and we do see the rise of class actions—we have seen a number of class actions recently—those can impede development as well. Would you see that predictability would be enhanced in terms of, as you say, picking the big principles, but then giving the Privacy Commissioner the power to enforce that? Would that put us on a better legislative frame than having to rely either on class action or on voluntary compliance?

[The Chair, NDP, Pierre-Luc Dusseault]

You are out of time, but I will give Mr. Péladeau a chance to respond.

[Pierrôt Péladeau]

What it comes down to is establishing the rules across the board, especially since new players are always entering the field, including young go-getters. Predictability is key because a lot of start-ups in the market right now don't yet have business models in place. They don't know how they will go about monetizing their relationships with customers and so forth.

If there were rules, businesses would know which doors were closed, which ones were open and what society expects in that area. Innovation isn't a natural phenomenon; it's the product of the marketplace and social rules. In that sense, a significant step towards innovation would be to say you have to put the consumer and user-friendliness above other considerations.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you.

I will now turn it over to Mr. Dreeshen for five minutes.

[Earl Dreeshen, Conservative, Red Deer, AB]

Thank you very much, Mr. Chair.

Thanks to all our guests.

I, too, was in Washington. We spoke to a lot of industry leaders and regulators. We were talking about disincentives as far as innovation was concerned. A few of my colleagues have described that as well. I think it's an important issue.

Mr. Elder, I'm not sure whether you've had an opportunity to go through that and see what the feelings of the members you represent are in regard to that particular area. To go back to some of the other comments that were presented, when you look at the ability to have ads that are specific to an individual, it's like going into a car dealership where everybody is on commission. This is a case where everybody is going to want to get at you, so I don't really see the difference. If you've indicated that you are interested in vehicles, then there is the possibility that they can get the information to you. That's why we get the Internet for the price that we do, because there is advertising.

Perhaps you could talk about that from the industry point of view as to the significance of their ability to get information to the user, and the significance it has for the general concept of the Internet and its usability for all individuals.

[David Elder]

Are you talking about it in the context of a targeted advertising position?

[Earl Dreeshen, Conservative, Red Deer, AB]

Yes.

[David Elder]

Yes, I think there are great benefits to interest-based advertising, as you suggest. It has certainly been explicitly acknowledged by the Privacy Commissioner.

Much of the Internet is free to use, particularly the social media applications. There are some “freemium” options on some of the sites, where you can pay a little extra money for extra features, but most of the major ones that people use for hours every day cost them nothing. They are advertiser supported.

The advertising you might send off to somebody in the vain hope they might connect and that it might resonate with them is worth less than an ad that you can try to direct more precisely to someone who might actually be interested in that product or service. The availability of those types of ads does a great deal to help lift these applications on which we rely.

For users, I can tell you that we're going to see ads on these things whether we like it or not. They're advertiser supported. It's a bit like television. We might think to ourselves that if someone were to give us the choice, we would rather not see any ads when we're watching a TV show. Well, if you don't see the ads, you're not going to see the TV show, because that's what pays for it. If they're going to see ads, I think a lot of users would rather see ones that actually do have some relevance to their wants, needs, and values.

[Earl Dreeshen, Conservative, Red Deer, AB]

Mr. Zushman, do you have a comment to make in that regard?

[Jason Zushman]

Personally, I guess I would take issue with the description of these services as being free. I think that the archiving and monitoring of information that's provided by users is what provides the monetary benefit to the companies. I would shudder to think of what the value of the database collected by a lot of these social media companies is, because that's where the real value is.

I also think it's a little different if consent has been given and a consumer explicitly requests, let's say, advertising for a new Ford pickup. It's an entirely different matter, I think, when a user types something into their update panel that talks about memories they had when they were young that concern good memories of riding around in a Ford pickup truck, and then all of a sudden advertising for the Ford pickup truck is tailored toward that user response. I think there's a distinction that should be drawn there.

The monitoring is what provides the monetary value, so I don't necessarily agree that it's a free service, but I can see the position being put forward.

[Earl Dreeshen, Conservative, Red Deer, AB]

Monsieur Péladeau.

[Pierrôt Péladeau]

There are alternative models, and interest marketing is interesting for that, but it depends who controls the process.

Lately I had to buy a dining room table and I had to go through 32 stores before finding the right one. I would have liked to make a tender. Those models are being developed, where I could make that tender. I want a table that seats a certain number of people, and so on and so forth. I put it on a site without any information about me. I'm a buyer. When the right seller comes in, I will contact him. Don't call me; I'll call you.

Those models are possible, so that's why we must not impede those kinds of innovations. We must look forward in that direction. We could develop models that would be economically sound based on that. There are alternative models.

[The Chair, NDP, Pierre-Luc Dusseault]

Thank you. Unfortunately, your time is already up.

It is now Ms. Borg's turn for five minutes.

[Charmaine Borg, NDP, Terrebonne—Blainville, QC]

Mr. Angus is going to start and then I will speak.

[The Chair, NDP, Pierre-Luc Dusseault]

Very well, you will each have two-and-a-half minutes.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Thank you.

I would like Mr. Zushman to talk about this jurisdiction clause, because I'm looking at a lack of consent by design. I get this form. If I want to use my Facebook site—and I'm not picking on Facebook—but if I want to use anything, I have to click on it and somewhere down in the 45,000 words it says that I'm governed by the laws of some other jurisdiction even though it's my data in my country. I would imagine most marketers want my data in my country.

How do we address that? I would be worried about going on a site and seeing, in 45,000 words, somewhere at the bottom, that all my financial transactions are governed by the laws of Somalia. You can certainly set it up in there, if you're not governed by the laws of the country that you're in. You could allow all manner of things.

Can we address that? Is that something we could zero in on and say this has to be fixed? It's my data. If it's in my jurisdiction I should be protected by the laws of my country, period.

[Jason Zushman]

Yes, Mr. Angus. Thank you for recognizing that point.

I tried to make that an integral part of the final portion of my presentation. The reason I did that is this. If we develop laws or we call on the Privacy Commissioner to enforce very real consequences, if the user has agreed and displaced the laws of the local forum for, as you would say, Somalia, what do you do when that comes before the courts? Or what happens when the Privacy Commissioner goes to actually enforce that judgment in a jurisdiction that doesn't have the reciprocal enforcements of what she is trying to declare as against that social media outlet?

I had put my mind to that briefly. I had thought it should be set up perhaps by way of legislation that could contain definitions as to what a social media company is. Also, social media companies that conduct business within the jurisdiction are clearly governed by the laws of Canada. You could have a voluntary method by which the large key players would voluntarily submit to be governed by that legislation if something like that is forthcoming.

I'm not sure if the appetite exists for that, but I guess there are different ways we could potentially analyze that issue.

[Charlie Angus, NDP, Timmins—James Bay, ON]

If the big players adopted one of our recommendations about jurisdiction and laws of jurisdiction, it would set a standard that would be much easier to follow, but without our raising it as a parliamentary committee, Bob's your uncle, and things can carry on.

I'll pass it over to Madam Borg.