first of all word the guidelines the were issued by the ftc, and why not? >> the guidelines are designed to inform the community, and of course it is a very diverse community. there are lots of different players in the state designed to inform them that there are walls that apply to them in the consumer protection and the privacy realm and to help them figure out how to ensure the

products are in compliance with the law. so that is the overall goal of the guideline. why now? the economy is booming as everybody knows. there are many consumers who are using applications on their smartphone, and in particular kids and teens are taking up speed. they have a unique ability for very detailed information about consumers on the jeal location. they can access content from defense such as contact lists, userid, all sorts of information there require careful thinking by act developers. so as this economy is booming, i think a tremendous innovation and the space to ensure the players understand the protection law applies to them. >> now these are guidelines, or

do they have the effect of all? >> these are guidelines designed to inform the community. developers, a third-party service providers, third-party players, everyone in this case about the types of things they should be thinking about to ensure that they are in compliance in the mall and frankly we think that many of the aspects of the guideline would help them produce better products and engender the consumer trust. >> if an app maker is asking for a contact list of saying we have to have by downloading the sat you have to give us your contact list, who you've called, your e-mails if you agree to that what is the purpose of getting that information would is that company going to do with that information? >> that is one of the things we are asking them to think about.

we are raising a couple of different issues. the consumers and parents who dominate the applications for their kids we need to understand what kind of information is collected and it's made clear to the consumers before the download the application because once the download the application the information collection can start to happen. some of the first and most important points that we make is be clear to the consumers up front in the store or on the landing page what information you are collecting and why. the other part of the questionnaires we are trying to encourage the developers to think about what information they truly need to make the application functional. if you're playing a game do they need to collect the location information? precise information the will track the consumer if it is abrogated and collecting can aggregate the consumer as she

passes through the world the entire day. so what information is needed to make it functional. in other words, should access be limited. how long do you need to obtain it, and when you are done with it what are you going to do with it, so those are the kind of questions that basically going to a perspective about privacy data collection that we call privacy by design and we want the application developers to be thinking about this up front. >> well, the problem is from some perspective that if you don't allow that information to be shared you can't download it. >> he might not be able to. but to the extent short answer, you're right. the consumer would then once she

knows it will be collected and for what purpose and who would see if she would be able to make an informed choice as to whether or not she wants to download the act and it might be the case as one very recent study demonstrated that when consumers understand how faugh much information is collected they have a tendency not to download them, so this kind of information, this truthful transparent information on the data collective practices may have an effect on the application developers who have been unable to thinking if we have to disclose all this and say the consumers will download it let's think about if we really do need all this data. as the mccaul of the ftc guidelines dealing with privacy issues? >> the new guidelines are broken down into two parts. one is privacy. the other aspect about the truthful advertising to make sure that the community understands that they are

marketing a product. they are often making promises to consumers or telling consumers that their app will do something and they need to be doubled to ensure that every claim they make about the application is truthful. so just as one example, we recently did a case involving an application that claimed if you hold that up to your skin it could treat acne and they were unable to substantiate that claim and that is a problem in the truth of advertising said they want to make sure that the app community understands when they say their app can do something they need to substantially cut. >> prior year to taking the show, i went on my phone and tried to download and app mandel was for a simple flashlight. but they wanted to know the location, contact list, etc., etc.. what would be the possible purpose besides marketing of

that application knowing where i am, who i am and who i am calling? >> i think it is probably not the purpose that is related to the functionality per say. but if the developer were sitting here the table with us i think the developer would say listen, we put that out for free. we have to be able to monetize our effort in some fashion through the purpose of advertising and we may help others advertise to you or we may advertise to you or the service providers may advertise to you. the most important point foe is the consumer understands that as they did the happening. in other words if all of the data is going to be collected for the purpose of providing advertisement, targeted advertisement to you that you are okay with that and you will download the application knowing that. >> julie, are you getting a lot of consumer complaints that the ftc about the apps and privacy?

>> we are getting complaints and concerns about all sorts of activities online. privacy is something that is growing in the consumer consciousness, and we are starting to hear a lot more about it. privacy is also one of those issues that the consumers may not understand as easily as they led for instance if they bought a product and were unable to get a refund. there are some interactions consumers have with businesses that are very obviously potentially problematic and we hear about those in the debt collection area, telemarketing and things like that. but when it comes to privacy they don't have the tools they need to truly understand what is happening in the data collection. would you have experienced this morning when you tried to download the flashlight application, we hear from consumers if they are wondering why is that information needed? and should i downloaded the app and what can happen to it? so we are starting to hear a

groundswell of concern about what is happening with data, but i don't know that it is complaints in the same way that b.c. complaints about other skill artists. estimate in a related issue they are also investigating the information marketing correct. we've also been looking to the people that sell this information and where it goes. >> the brokers, yes. we have in a report that we issued several months ago, we have highlighted some concerns are around the data broker communities and they are entities that collect vast amounts of information about all of us, both online and offline. compile them into profiles about each of us and then sell that information for various purposes to be used by entities for marketing, sometimes to make eligibility determinations for things like credit, insurance,

etc., and sometimes for other purposes. weeks -- i.t. in particular i think the agency as a whole has expressed concern over whether the consumers really understand what is happening in this industry shocker. we think that the data brokers, some of them provide information about what they do. the consumers have no idea what they are because they are not interacting treacly with consumers. they are gathering information and selling it to third parties and they don't really interact with consumers, so they don't know who they are, how to find out what the data collection practices are common and how-to determine what information the the the broker has about them and whether or not it needs to be corrected. so there are lots of transparency issues that we think need to be addressed in this data brokerage industry. >> commissioner, if a an app

maker disregards the guide lines, is there a shtick at the end of that? minnick if they disregard a guideline we are not going to bring enforcement action for disregarding the guideline. the guidelines are best practices. if they are followed, and application developer will rule beyond the road towards not only complying with the law but we think also as a whole engender and the consumer trust cash which will help them with their marketing and their growth of their product. if some of the elements of the guidelines go or not followed they could find themselves under scrutiny because they might cross the line into an area that does violate the law. so it's not if they don't follow the guidelines okay we will bring action against them right away but not following the guidelines means they could run

into trouble down the road. >> do you think that the law regarding privacy are distinct enough or quick enough for modern enough or would you like to see other actions by congress? >> i believe and i know others of my colleagues she did become believe they should have a law here in this country. i think that we have good protections but better protections in the country and especially technology advancing so rapidly it's time to be clear what the rules of the road or. the issue guidelines and to education and go around to business is all the time and speak. we do law enforcement and issue reports but at the end of the day i think the law would provide clearer rules of the road for everybody which would benefit the business as well as consumers. i also think there is a particular law of the contras who could pass with respect to the data brokers and the transparency and around the the the broker practices that we

discussed a few minutes ago. >> how does the ftc work with congress etc. when it comes to privacy? who takes the lead? >> we do with the congress tells us how to do. they have givery expensive law dealing with privacy. it is an unfair practice law in the the general not be enforced. we also have the laws in particular areas that we enforce involving children's privacy, financial privacy. some medical information to read and when i said financial, it is in some context, medical inflation in some contexts. so, we are very much involved in the privacy and we of the federal trade commission or leading privacy law enforcement entities. the fcc has a very important role when it comes to the carriers and when it comes to

other entities in the mobile space. so we work with our sister agency of these issues. >> would it be possible to have a dual system where okay if you want this you can pay a dollar a month for it and we will track you or you can get it for free and we get your information. >> i think it exists in the current world. amazon to begin with there are lots of other entities that say we will target you with advertising or for one price may be free or a lower price. but if you don't want to be advertised to come here is what the product will cost you. i think we may move into an app world that is more along those lines but the development of that kind of a business model to read as long as the disclosure is clear to the consumers and is up front and as long as the type of data collection that we are

talking about isn't so evasive that it really requires extra affirmative consent by the consumer to it as long as we are talking about the normal tracking for the purpose of targeted advertising. that might be something that we will be seeing relatively soon to read as and if you'd like to read the guidelines we could go to ftc.gov published on line at the federal trade commission to the commission web site. one of the democratic commissioners on the federal trade commission has been the guest for the first half of the communicators. coming up next representative mary bono mac you is also looking at this issue. now joining us we continue our conversation about apps is representative mary bono mac was the chairman of the commerce manufacturing trade subcommittee for the energy and commerce committee and representative coming you just held a hearing

recently on apps. what was the point of the hearing? >> to make sure that we explore what is going on in this area and there are so many jobs being created and we want to make sure any policies we put forward in washington don't squash the ballooning industry. ten years ago, 15 years ago, nobody thought of this. it's a relatively new industry that has been unleashed because of great ideas and we certainly don't want the government to come and destroy that. >> what were some of the problems that you saw in this area that he would like to address? >> one of the biggest problems is the work force. they are still looking for more people to move into this industry to develop that and work on creating the applications and all that goes into. that's the biggest problem that fewer people have that somehow in washington we are going to decide your way to tell liver but how to do their business or how not to do their business and hurt a growing business. the only real fear is the work

force issue. the rest of it is nothing but optimism. they are recognizing so much growth in the industry that people are turning to the gaps. i used to get sable in the hearings for the moment that the other night i was babysitting my grandson and he started crying, and i did a good thing that any grandparent would do to revive that right to buy ipad and i tried to fight and application for the baby. >> were you successful? >> if i downloaded a app like a baby who isn't going to have any of it but the point is, you know, more and more if there is a problem, there's an app on the market we should look for it and see how good it is coming and that is what was very excited about the hearing is that people very optimistic about the growth in this industry to disconnect the name of your hearing was if there is -- where there is economy or something like this -- there seemed app for that. do you know how this contributes to the economy at this point?

>> i know the projected growth is free to be $100 billion by 2015. projected, and again. but i don't know if that is a targeted number or whether it is going to be higher than not because again, people are more and more and opting to the fact that there is an application for anything. when it is the most amazing is truly if you think of something and you go look for an application for it, somebody is probably a few steps ahead of you read it is already on market that more and more people are going to turn to this, and i think a lot more software developers are going to recognize the mobile application platform is the logical place for people to go. >> in a statement he said nearly 400 million or download it last christmas eve and christmas on that day alone worldwide. so many are free. calmar the app makers making money? >> guest: that is a great question to ask them.

there are various business models, some probably are not making money and some are perhaps losing money. one of the big questions the congress is going to ask is the privacy of the data how you are monetizing your app. and the representative markey brought up the bill that he has now looking at privacy in the mobile app and that is one of the questions you have to ask to be if nothing is free what are we giving up for a free app. but many are making a lot of money giving if you look at the success of zynga anybody that plays words with friends knows that it is a huge hit. they become successful. >> representative mary bono mackall,, we talked with julie brill from the ftc and she talked about the guidelines and so many deal with privacy. what are your views on that?

>> the discussion between the ftc and the congress is some of it should be voluntarily based or how much should the congress to step in. there is the pressure they put on the guidelines the industry uses and the ftc is constantly evolving on privacy. i think over the past year we've done a good job slowing the need to regulate in the space we can stifle innovation if we come in heavy handed so i appreciate the ftc has taken this approach let's give them guidelines to follow. but the industries themselves well tell you and tell us it is in the best interest to provide something for the consumer that actually doesn't go too far so the issue is how much of it is guidelines yet how much of it is

self industry regulated or government intervention. >> when it comes to the privacy issue, what is your philosophy? >> guest: >> to move slowly. there are a lot of things i know we talked about before there are a lot of things that yes, i called it last time the yuck factor that's gone too far. but to the day the american consumers recognize oftentimes they are giving up their privacy for their convenience. the consumer is choosing again in many of these cases specifically right of the that they will say to proceed further you need to enable your tracking device are you okay with that and they will say yes because i wanted so badly it's good to make my life better. i think the congress used to step in and stifle innovation before any harm is done to the american public and we can hurt the struggling economy further if we are not careful.

>> last week on this program we talked on your fellow energy and commerce committee member joe barton and the need for the potential need for a more comprehensive telecom shocker re-ride or privacy bill. what are your viewpoint on that? >> joe barton is a good member of the committee, and certainly perhaps i hear more from the startups that don't regulate in this case i think, you know, joe barton tends to believe that some things are perhaps technologically feasible, when i'm not sure that they are. so these are questions and good

reasons for the committee hearings and discussions among ourselves as members. >> how would you grade the health of the industry today being from california? >> i would agree that extremely strong and growing. again if we can meet the demand of the people looking for the developers. jester day i asked a very important question. are we headed towards a bubble and is it too good to be true? it is pretty good unanimity that this is different this is a strong and robust economy that is developing and the people are optimistic it is a solid economy and i believe that to be true to his bequest time we talked with you you were holding hearings about the sony play station. the date of reach. what is the status of that? >> it says it is a work in progress. i unfortunately -- it should be

moving in my view quicker than it is. every week there is a new breach and more reason to bring the consumer on board to be a part of the process of stopping the breaches but in the congress there is still give-and-take. i have the sort of weaving through the personalities of congress to find the right bill united we have that bill. for a lot of the members still the question the need for once federal regime and federal law as opposed to all of the different states. this is probably one of those examples where if something is going to have to happen people are proving why we have to pass this bill before the law makers get it. >> do you see cybersecurity coming back in the next converse or potentially in the lame-duck session? >> i think the issue is here to

stay. the issue of national security and the protection. the issue specifically on the table right now is great to be around a little bit longer yet. i don't know whether it will be a lame duck session. in the senate there's a lot of debate and discussion on how we move forward. in my view i support senator mccain and his philosophy that the best way to do this is not to strip the industry to the government or the government to decide it a mandate what technologies are. one thing is for short of the government especially the congress tends to be much slower in the space than the private industry and if they are passing what is antiquated and throwing that out into the private market, it is useless. it can be a problem rather than a solution. espinel representative mary bono back as the chair of the trade subcommittee of the energy and commerce committee. republican from california.

when it comes to children, is that a different -- do you view privacy legislation and any type of tactical legislation differently or not? >> we all do, of course. we agree or children need to be protected different the. the problem is, for a simple, like facebook, take facebook as an example. when we talk about trying to regulate differently for children, we have to recognize they are given tools to participate as older children or allows adults so we prevent a problem that is already being circumvented by parents and parental controls they are saying it is useful for my children i'm going to help them get on board and we need to change the age of the parents already reject that. so there is a problem to ask

what are we stopping. i know there is a brand-new tour coming out with the president has a brand new tablet designed for children in the this is an example we should look at to regard their harms our potential or is this a wonderful tool for kids? and if congress gets an a becomes heavy-handed or we preventing the useful devices like this tablet from coming to the market. >> terrapin information about the data sellers and brokers and taking the separation from the apps or whatever and selling it. do you agree looking into where that information is going? >> i think that every piece of data that we put out of the internet is being collected in many places any way and the consumer should be careful about what they're willing to put out

there. the data brokers that built the database and kabyle of the data and put it together one does have to ask is there a healthy purpose for that or not. but again, to be the consumer needs to recognize if you're putting it out there somebody is collecting it, or whether it is an individual if the consumer cares they should educate themselves about what might happen to 30 they be careful about what they put out there would still give republicans could contain control in the next congress you remain chairman of the subcommittee what issues would you like to look at? >> again, job creation and the space that we are talking now apps are a good place to go. it's almost as if somebody invented the microwave oven in the speed by but there are offshoots that even better and everybody is using them, so i