Weblining and Online Privacy

Via the NY Times:

In the 1970s, a professor of communication studies at Northwestern University named John McKnight popularized the term “redlining” to describe the failure of banks, insurers and other institutions to offer their services to inner city neighborhoods. The term came from the practice of bank officials who drew a red line on a map to indicate where they wouldn’t invest. But use of the term expanded to cover a wide array of racially discriminatory practices, such as not offering home loans to African-Americans, even those who were wealthy or middle class.

Now the map used in redlining is not a geographic map, but the map of your travels across the Web. The term Weblining describes the practice of denying people opportunities based on their digital selves. You might be refused health insurance based on a Google search you did about a medical condition. You might be shown a credit card with a lower credit limit, not because of your credit history, but because of your race, sex or ZIP code or the types of Web sites you visit.

More social surplus will inevitably be captured by producers if this trend continues (assuming the information allows them to more appropriately price their products and potentially engage in price discrimination). Is that a bad thing for society? Many consumers will certainly lose out, but what about society as a whole?

For a more upbeat perspective about online data issues, read this Nick Schulz piece about Facebook's decision to go public and how it could actually be a good thing for its users.