You may be forgiven for being confused about the mixed messages coming out of Brussels yesterday on privacy. The ICO (Information Commission Office) was pretty hard-nosed about the ePrivacy directive and cookies, indicating that browser settings would not be enough in terms of consent. The hard opt-in is back on the table it would seem. Every site would have to gain consent from users for the use of cookies. The BBC ran a fairly hysterical story about the upcoming EU directive complete with some quotes from Christopher Graham. Graham outlined that the law was coming and that the EU would go after those that collected online information illegally. I don't know who is advising the politicians but this could be the worst piece of legislation to come out of Brussels since eurocrats tried to ban the bent banana (oh, yes!). This is going to be a disaster. There are several reasons why.

How the hell are you going to police this?

Let's put this in perspective: there are hundreds of millions of sites that attract European visitors every other day. Most will be dropping cookies on users to target ads. Are you going to hire thousands of people to monitor all these sites? Do you know how difficult it is for a publisher to ascertain what cookies were dropped on its own site? And you're looking to do this at scale? And what about non-EU sites that don't comply, venerable publishers like BusinessInsider and NY Times? Will you try to block all of them in Europe. I doubt it.

This is an act of commercial suicide

If the EU did some due diligence instead of acting like an impetuous teenager, it would realise that publishers are heavily dependant on targeted advertising. To cut off this revenue source would drive us closer to a paywall hell. Here's a little of nugget of truth for you EU guys: advertising keeps the internet free. The EU is supposed to be big on freedom of information. Did you stop to consider what effect a hard opt-in would have? Victory for the paywall fanatics and another huge cost to your cash-strapped citizens.

Another consequence that you failed to factor in is how difficult you're going to make it for European publishers, advertisers and technology companies. While the US is going down the browser-blocking route, the EU appears to be countenancing a move that will kill off a number of industries that generate jobs and tax income for Europe. These type of digital businesses will include to name but a few: affiliates, ecommerce specialists, online publishers, analytics, online gambling and ad technology. Bravo sirs.

Everybody hates pop-ups

It looks like we're going to be hit with tsunami of pop-up boxes looking for our consent to collect information. As I tip over to the Guardian Media section every morning, I'll be forced to enter my details so as to give the Guardian permission to drop a text file on an ANNONYMOUS machine. EVERY MORNING. It'll start to irritate me. Messrs Blodget and Arrington will realise there is an opportunity to set up digital media vertical covering the European market. They will hire someone in Europe, but they will be exempt from European law given their servers will be hosted in the US. I will stop reading the Guardian and get my information from these less intrusive sources.

In all this mess I have been wondering if the EU citizen had been consulted when this legislation was being passed. As a counterpoint to all the political guff swirling around this issue, McKinsey & Company produced a report about the benefits of an ad-funded internet. The report is printed in full below. The main findings make for interesting reading:

- Advertising disturbance from pop-ups and banners ads and privacy issues are present among more than half of Internet users. While this is a concern, the perception of advertising disturbance with regard to online services is in line with other media, such as television;
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- On average, the price an Internet consumer is willing to pay to avoid those issues is worth only one-sixth of the total value derived from ad-funded Web services;
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- Among the forms of disturbance analyzed — advertising interruption and use of personal information—users are most ready to pay for preventing advertising interruption, particularly ad banners;

- There are two segments of users who value their privacy relatively highly. A narrow niche segment–one percent of users–is “privacy concerned,” that is, they put a high value on a strict adherence to privacy. Another, more material group of users (20 percent), values privacy as much as it values Internet use itself. This segment features users who place an average value on privacy but a particularly low value on Internet use. It follows that stimulating more rewarding usage is at least as likely to generate higher user surplus as applying a higher degree of privacy controls.

This new directive is totally unworkable, and is going to cause all sorts of problems for the digital sector. Self-regulation is the way to go - and it would be sensible for the EU to work with the industry instead of ordering diktats from Brussels. The big wild card in all this is that a number of governments, most notably the UK, are not so enthusiastic about a hard opt-in. Given the predominance of London in the online ad space it would be wise to take a more cautious approach. This will probably result in a compromise, which would be the best outcome - perhaps a mix of self-regulation and browser opt-outs. There is ultimately too much to lose for everyone involved.

McKinsey Study