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In 1998, about one year after leaving the Federal Trade Commission, Christine Varney wrote an op-ed that appeared in Wired magazine on Internet privacy — a topic that would soon consume her professional life. The former FTC commissioner, whom Chairman Robert Pitofsky credits with pushing the agency to examine privacy protections on the Internet, said she believed it was time for the government to step in. “As much as I support market-based solutions, government action may be necessary when the market fails,” she wrote. “And so far, the market hasn’t done much about the public’s concerns.” Her position has since evolved. Today, as a partner at Washington, D.C.’s Hogan & Hartson, Varney is a leader in the dot-com industry’s fight against what she sees as broad and dangerously vague government regulations aimed at cracking down on intrusive business practices by Web sites. And she now believes that the marketplace has stepped up to the challenge. Just last week, in the wake of FTC recommendations for policing Internet privacy, she told a Senate committee that she “entirely disagree[s] with the conclusion that privacy in cyberspace is woefully inadequate and that legislation is necessary to empower the Federal Trade Commission to regulate data practices in e-commerce.” She also argued that no new laws were needed because current regulations already give the agency the power to insist on privacy protections. To be sure, Varney wouldn’t be the first government regulator to evolve in her thinking after leaving office. But one thing has remained decidedly static: Varney’s reputation as a hard-nosed advocate. Many credit Varney and her efforts to establish industry “best practices” for the substantial progress that has been made on the Internet privacy front. Her current clients include the Online Privacy Alliance (OPA) and the Network Advertising Initiative (NAI), which include many of the leading e-commerce companies, such as DoubleClick Inc., that triggered concerns about consumer privacy because of fears that they were surreptitiously gathering personal data about online visitors. “She’s very effective at bringing diverse points of views together,” says Clifford Sloan, general counsel of Washingtonpost.Newsweek Interactive and a former colleague of Varney’s in the Clinton White House. “She’s very good at forging a consensus and making people feel like they are part of the process.” But her seemingly shifting views on regulating the Internet have also earned Varney her share of enemies. “People like Christine Varney are the anti-privacy lobbyists,” says Marc Rotenberg, executive director of the Electronic Privacy Information Council, an Internet consumer watchdog group and a proponent of privacy regulations. “She wants to put the best face on industry practices. It’s both a popular and a profitable issue for a Washington lobbyist.” Varney takes exception to being labeled a lobbyist. “I’m a lawyer, not a lobbyist,” she says, adding that she is not “personally or professionally uncomfortable with my current positions. “I don’t think I was calling for more government regulation [in the Wired article], I was calling for aggressive action in existing law,” she says. Besides, she insists, the e-commerce industry has made great strides toward protecting privacy in the past two years. A RISING STAR Varney, 44, returned to Washington, her birthplace, in 1982 after working for a nonprofit community outreach program in California, where she also served a stint as director of community services with United Farm Workers. Varney grew up in a politically active family — her parents volunteered for Sen. Bobby Kennedy’s 1968 presidential campaign — and began attending law school at night while working a variety of day jobs at D.C. firms. She also waited tables at an area restaurant. Upon graduating from the Georgetown University Law Center in 1986, Varney bounced around a couple of law firms before being tapped as general counsel of the Democratic National Committee in 1989 by then-DNC Chairman Ron Brown. Varney met Brown when both were members of the National Lawyers Council, which recruits lawyers to do pro bono work for the DNC. Varney had supported Brown in his quest to land the top DNC slot. By 1990, Varney was back in private practice, as an associate at Hogan & Hartson. It wasn’t long until Varney was summoned again by her DNC contacts to take on the role as general counsel for the 1992 Clinton presidential campaign. She parlayed her political connections into a spot at the White House as secretary to the Cabinet and then an appointment to the FTC, where she served from 1994 to 1997. In 1995, Varney invited business leaders to a round-table discussion on what the agency should focus on in the coming years. On the second day of the meetings, she says, it became apparent that the Internet posed the greatest concerns. “We kept on coming back to privacy, where there were not a lot of rules or clear thinking,” she says. Her privacy initiatives won her praise as a champion for consumer rights, as well as the admiration of her colleagues. “She was an outstanding commissioner,” says FTC Chairman Pitofsky. “She took the lead in a lot of the projects we are working on now.” PRIVATE OFFERING In 1998, to Pitofsky’s disappointment, Varney chose not to seek another term. She returned to her old firm, Hogan & Hartson, where she has built an enviable practice. She quickly made a name for herself as the Netscape Communications Corp.’s public face, taking on Covington & Burling partner and Microsoft Corp. mouthpiece Charles “Rick” Rule on PBS’s “The Newshour with Jim Lehrer,” charging Microsoft with eliminating her client’s Internet browser business. In the fall of 1998, around the same time Varney became an adviser to the Online Privacy Alliance, DoubleClick retained Hogan & Hartson, primarily for Varney’s counsel, says DoubleClick’s man in Washington, Josh Isay. Last spring, Varney helped organize yet another coalition, the NAI, which comprises about 10 Internet advertising companies. Varney strongly urges her clients and the members of the coalitions she advises to talk with regulators about their business models and plans. And according to Mark Moran, general counsel of 24/7 Media Inc., which is a member of the NAI, she helped the group develop privacy principles and arrange calls with the regulators at the FTC and Department of Commerce. “A lot of what I do is explain to people how the FTC works,” she says. The FTC’s finding last week that industry efforts at protecting privacy on the Web have come up short was considered by many as a serious blow to the advocates of industry self-regulation. SNARLS IN THE WEB Although no one expects this Congress to pass any of the multitude of bills that have been proposed on the issue because of election-year politics, tensions are beginning to form between companies that gather customer information for their own marketing use and those — such as Varney’s client DoubleClick — that aggregate consumer data and sell it to third parties. Mark Plotkin, a partner at Covington & Burling who is working on Internet privacy issues for a number of Fortune 500 clients, says the activity of companies “whose business model consists entirely of profiting from the surreptitious collection and aggregation of consumer data … could significantly burden the legitimate e-commerce efforts of established companies that engage in perfectly acceptable practices.” Scott Cooper, Hewlett-Packard’s manager of technology policy in Washington, also believes that companies should have to disclose with “clear and conspicuous language” what they do with information gleaned from Web site visitors. The gap between the Hewlett Packards and DoubleClicks of the world has made Varney’s mission all the more difficult. Just last month, HP, one of the founding members of the OPA, resigned from the alliance and came out in favor of limited legislation mandating “a floor of standards” on privacy disclosure — a stance that clashed with the alliance’s stated opposition to any new regulation. Varney acknowledges that while some of the members of the OPA thought that “DoubleClick could have better handled the press inquiries” related to the company’s plan to merge two databases to compile even more personalized information about consumers, “members of the OPA are generally comfortable” with the company’s current position. GOING THE DISTANCE But even other companies within the Internet advertising community are trying to distance themselves from DoubleClick. Engage Technologies Inc., DoubleClick’s closest competitor, is trying to do just that. Peter Ross, a partner at Wiley, Rein & Fielding who is working for Engage on privacy matters, says his client “definitely feels the need to educate folks about the different business models that are out there.” Translation: We are not DoubleClick. And traditional watchdog groups will also step up scrutiny of Internet privacy issues. The American Civil Liberties Union, for example, recently created a privacy task force to monitor the issue. Barry Steinhardt, associate director of the national office of the ACLU, supports the FTC’s recommendations. “It’s unrealistic to believe that companies can regulate themselves,” says Steinhardt. “The technology may change, but human behavior won’t.” Varney counters that it makes perfect sense to let companies regulate themselves. After all, it’s in a company’s best interest to offer services and privacy protections that make consumers feel comfortable visiting their sites. “My position has always been that the market can deliver better, more effective tools to protect nonsensitive data on the Internet,” Varney says. “My commitment is equally distributed between upholding consumers’ rights and keeping the Internet robust.”

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