The Death of Privacy - ' Why Privacy Matters '

Stories like Lilly's—particularly the role that the EU directive played in the company's conversion to a pro-privacy stance—bolster the notion that U.S. companies won't install comprehensive data-protection systems until government legislation forces them to. About a dozen bills have been introduced in the current Congress that tackle various aspects of data protection. The most expansive legislation is the Personal Data Privacy and Security Act, co-sponsored by Senator Arlen Specter (R–Pa.), chairman of the Judiciary Committee, and Senator Leahy, the committee's ranking member. Their proposal would require most companies with at least 10,000 digital files on individuals to adopt data-privacy procedures that protect against unauthorized access and use of personally identifiable information. Violators face fines and prosecution.

When it was introduced in mid-2005, the bipartisan legislation was expected to pass easily before the end of the year. But revelations about warrentless wiretapping of domestic phone calls by the National Security Agency and other terrorist-related law enforcement activities have preoccupied the committee since then, and the Specter-Leahy bill has yet to reach the Senate floor. None of the other data-privacy proposals have been voted on, in either house of Congress. Frustrated by the lack of action, Senator Leahy says that it signifies a general disinclination among lawmakers to tackle privacy problems. "The longer there is erosion of Americans' privacy rights, the more difficult it becomes to do something about it," says Leahy. "This Congress has not made a priority of privacy protection. I hope the next Congress will."

That can't come a moment too soon, says PwC's Fowler. As companies grapple with basic data-privacy concerns that should probably have been dealt with a decade ago, the issue is fast gaining in complexity. "Our notion of identity is going to change a lot in the new millennium. We're just scratching the surface now," Fowler says. "Which aspects of our data identity must be protected at all costs, which aspects of it are the most sensitive, is just beginning to come into shape even as the amount of data about us continues to expand. We need to step back and understand the dynamics of identity, and how it is shifting and putting pressure on businesses, government, regulators and policy makers from a social, political and cultural perspective. That is a discussion we are not having."

Be sure to read the sidebar: Privacy's Preemptive Strike