Spyware bill raises cookie fears

US lawmakers are considering changes to an anti-spyware bill to make sure "cookies" are not on its list of unlawful technologies, in a potential boon to online marketers.

A spokeswoman for House member Mary Bono, the California Republican who drafted the revised Spy Act in January, said that concerns have been raised over language in the bill targeting cookies, which are tiny tags used by sites to keep track of passwords or analyse internet behaviour.

Specifically, the web advertising networks lobbying for the changes are worried that the language is too broad. They argue that the law as written could restrict common or useful practices that allow third parties to set cookies to monitor advertising or the effectiveness of a website.

Trevor Hughes, an executive with the Network Advertising Initiative, which represents numerous online ad networks, including Advertising.com and DoubleClick, said: "The exemption as it was written did not include third-party cookies, and that's a huge swath of industry that deals with sophisticated online advertising, analytics and some ecommerce. It was and remains a real concern, until we see better language."

Still, Bono spokeswoman Kimberly Pencille said that the proposed law as written deals with monitoring software, not text files, meaning that it inherently exempts cookies. Furthermore, Section 3 of the law addresses the exemption of cookies, saying that they're data files set by interactive service companies used to provide information.

But the NAI has remained worried because the bill doesn't specifically exempt cookies set by third parties, Hughes said.

"We're considering changes that may strengthen it. We understand that there are concerns that the cookie exemption isn't clear, and we're willing to look at that," Pencille said.

The tussle over language reflects a broader issue facing those fighting spyware: defining various software and technologies. As spyware has proliferated, most online-tracking technologies have come under the microscope, and some more benign forms of code have been lumped into the category of malicious software.

Labels such as spyware and adware cut a wide swath, with many grey areas that can spark disagreements among software makers, consumers and security experts over legitimate and illegitimate practices.

The proposed federal law to regulate spyware failed to win approval last year, but its backers are trying again. The House Committee on Energy and Commerce scheduled a hearing last week on its version of the spyware bill supported by Bono and by committee chairman Joe Barton, a Texas Republican.

The effort stalled in Congress in 2004 when the House of Representatives approved the Spy Act by a 399 to one margin, but the Senate never voted. Even though last week's hearing was a formality, the process is being closely watched by technology companies because it could result in changes to the legislation this time around.

Stefanie Olsen writes for CNET News.com. CNET News.com's Declan McCullaugh contributed to this report.