Google, Comcast, Verizon, AT&T and Time Warner in coalition to fight state-based public interest and consumer protection issues

Scratch a media conglomerate–old or new–and you reveal a political agenda that is all about the aggrandizement of power–consumer and data privacy be damned. Here’s are excerpts from a Kate Kaye story on the roll-out of the state-based coalition designed to protect the interests of the online advertising industry.

From California to Utah to New York, state legislators regularly propose laws with major implications for the online ad industry. A once-loose collective of companies including Google, Yahoo, AOL and eBay finally incorporated officially this year after four years of collaborating to influence state policy.

The most recent target of the State Privacy and Security Coalition’s efforts is New York Assemblyman Richard Brodsky, sponsor of a bill preventing third parties from using sensitive personally identifiable information for behavioral ad targeting.

The coalition doesn’t like it. A missive sent to the legislator April 7 by the coalition’s lead counsel calls the bill “unnecessary,” and “most likely unconstitutional.”…Jim Halpert, partner in the communications, e-commerce and privacy practice at law firm DLA Piper, penned that letter. As head counsel for the coalition, he also recently facilitated its incorporation.

“There’s much more state activity than federal activity,” said Halpert. Not only does that create more laws or proposed laws to deal with; the state process moves much faster.

According to Halpert, the coalition also includes Verizon, AT&T, Comcast, and organizations such as the Internet Alliance and tech trade association AeA, formerly the American Electronics Association. With Halpert at the helm, coalition members conduct weekly phone calls, and sometimes meet in-person with other members or with state lawmakers to influence legislation involving online privacy and data security, Internet advertising, online child safety, content liability, spam, spyware, and taxation…

“We see the coalition’s role as helping state legislatures understand the technology policy area. I think we all recognize the technology environment can be complicated,” said Adam Kovacevich, Google’s senior manager, global communications and public affairs. Google Director of State Public Policy John Burchett is the firm’s primary liaison to the coalition.”

source: Google, AOL and others make state policy coalition official. Kate Kaye. clickz.com. April 14, 2008

David Cohen and Brian Roberts need to be sent to reform school. That’s public interest and media reform, although Comcast’s arrogant behavior regarding bandwidth throttling and seat-grabbing at public hearings suggests that Cohen and Roberts deserve to be sent up the lack of corporate responsibility river. But Pennsylvania Governor Ed Rendell, long a Comcast favorite and Cohen’s former boss, would probably pardon them.

Comcast shareholders should be alarmed. At a time when cable’s future growth has never faced more challenges, the company’s leaders are engaged in a reckless attempt to shore up market share and suppress free speech. Such behavior discredits the company, including its board (Rockefeller Foundation head Judith Rodin serves on the board, btw). Comcast owes the country an apology for its actions. If it engages in a `we’re a big powerful monopoly and can do what we want’ attitude, it will become the poster child of a media company that most users, especially youth, will loath. Shareholders, the press, and advocates need to bring real reform to Comcast, before it becomes the brand we love to hate–and bypass.

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The departure of Deborah Platt Majoras should mark the closing of the special-interest revolving door at the FTC

Deborah Platt Majoras came to the FTC as a corporate lawyer who had represented Chevron Texaco while at the Jones Day law firm. Under her watch, the FTC failed to make any real advances protecting consumer privacy, ensure an open Internet (network neutrality), and promote competition and diversity in the key online marketing sector (Google/DoubleClick, for example).

The FTC should have a chairman and commissioners whose background indicates a strong commitment to consumer protection. They have to be willing to take on the powerful special interests, much of which will be from the big business sector. We need to stop business as usual, where yesterday you were a top corporate lawyer–then you are at the FTC–and soon, back in a well-compensated corporate boardroom. In Deborah Platt Majoras’s case, she is to be a top counsel for the Procter and Gamble company, according to press reports (her former law firm Jones Day has represented P&G, btw). The next administration must appoint officials to the FTC–and the FCC–who are in the orbit of the special interests. The cozy K Street golden revolving door should be sealed shut. If the country is to tackle the problems facing it, it requires consumer champions and business visionaries who understand what is at stake.

I would be remiss if I also didn’t remind readers that my group and the Electronic Privacy Information Center asked Chairman Majoras to recuse herself on the Google/DoubleClick merger, once we discovered that her husband’s law firm Jones Day represented one of the parties. She refused, and groups have asked the FTC to turn over documents related to the case. We intend to pursue this, of course, despite her departure. But the real point is that we need officials at the FTC who have demonstrated through their previous work and intellectual perspectives that they represent the concerns of average Americans—not multi-billion dollar law firms, Fortune 1000 corporations, or well-connected trade associations. In the 21st Century, anti-trust and consumer protection plays a crucial role in the operation of the digital marketplace. That alone is reason enough to make who becomes a FTC commissioner an important public policy issue for those who care about serious reform.

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EC’s Questionnaire 1 on Google/DoubleClick merger

Following press reports of a new questionnaire sent by the European Commission Competition Directorate, we thought we should place here what we believe was the initial survey sent. Eventually, Congress and others will need to investigate how well the FTC conducted its own review of the deal. Frankly, several parties–including commissioners–spoke of their concern that the agency’s loss in Whole Foods and other cases made it more difficult to confront the Google takeover of DoubleClick case. This is an ongoing story. But for now, here’s the questionnaire:

Case COMP/M.4731 – Google/DoubleClick

Questionnaire to Customers 1
Deadline for Reply: 18/10/2007

Google Inc. (“Google”) notified to the European Commission its intention to acquire control of DoubleClick Inc. (“DoubleClick”) by way of purchase of shares. The two parties to the merger Google and DoubleClick are hereinafter collectively referred to as “the parties”. Both are active in the online advertising industry.
Pursuant to the Merger Regulation , the Commission is required to assess the operation’s possible effects on competition within the common market. To this end, the Commission needs to gather relevant information from the parties to the operation as well as from other market operators, such as competitors and customers.
Therefore, your replies to the following questions as well as any other opinion on the effects of the operation you might consider relevant, are of key importance to the investigation. We should also be grateful for any additional remarks you may wish to make relating to the proposed concentration. If you consider that a particular question is not relevant, please indicate this and explain why. Please reply to this questionnaire on behalf of all companies belonging to your group.
When you reply to this questionnaire, please provide TWO versions of your reply: (i) a CONFIDENTIAL version; and (ii) a NON CONFIDENTIAL version which excludes business secrets or other confidential information.

In accordance with the Merger Regulation and in the light of the deadlines which the Commission must respect following the notification of the case, the Commission wishes to have your reply by 18/10/2007.
If you have questions of administrative nature or wish to receive this questionnaire in electronic format, please contact Ms Györgyi Nyiregyhazi (Tel.: +32 2 29 85327, e-mail: gyorgyi.nyiregyhazi@ec.europa.eu) clearly indicating the reference: M.4731 Googkle/DoubleClick – Questionnaire to Publishers.

If you have any further questions on the substance of this request, please contact Mr Bertrand Jéhanno (Tel.: +32 2 29 91048, e-mail: bertrand.jehanno@ec.europa.eu), Mr Carl-Christian Buhr (Tel: +32 2 29 86 033, e-mail: carl-christian.buhr@ec.europa.eu), Mr Flavien Christ (Tel: +32 2 29 90931, e-mail: flavien.christ@ec.europa.eu,), Mr. Peter Eberl (Tel: +32 2 29 60783, e-mail peter.eberl@ec.europa.eu), Ms Vera Pozzato (Tel: +32 2 29 93012, e-mail: vera.pozzato@ec.europa.eu).

Thank you for your help and co-operation.

A. General questions

Please give the contact details of the person responsible for replying to this questionnaire
Company:
Contact person: Phone:
Position: Fax:
E-mail:
Address:
Country:
Company web-site:

Please give a brief description of your organisation, of its size and of your activities. If your company is a subsidiary please indicate the group to which it belongs to.
Description of your organisation:

Please indicate the countries within the EEA in which you are active as online publisher (website owner):

B. The provision of display ad serving, management and reporting infrastructure technology
The provision of display ad serving, management and reporting infrastructure technology could be distinguished according to whether services are provided to advertisers (and agencies) or to publishers (including self-provisioning).
The Commission understands that advertisers create advertisements and upload them onto the advertiser-side ad server. Once a website publisher has agreed with the advertiser (directly or through an ad network or ad exchange) to run the ads on its website, the publisher enters the campaign terms of the ad (location, price, targeting criteria) into the publisher-side ad server. There is then a relationship between the publisher-side ad server – which records the “impression” generated by the user’s visit of the web site and determines the advertiser to call – and the advertiser-side ad server – which chooses the appropriate ad to deliver on the web page. The relationship between the two servers also enables the advertiser to obtain information relating to the user’s online behaviour in the context of the placed ad via browser cookie technology.
1. What is the value of the online advertising revenues generated by your website(s) in Europe?

2. Through which channels do you sell advertising space on your website/s?
Direct sales: YES/NO
And/or
Brokers, intermediaries, ad networks, ad exchanges: YES/NO

3. If you use both the direct channel and the indirect channel (ad network/ad exchange), please indicate (broadly) what % of your online revenues originate from the direct channel.

4. Do you foresee that direct sales of online advertising will decrease in the future in favour of intermediation through ad networks and ad exchanges?

5. Do you foresee that numerous ad networks and ad exchanges will be able to survive in the near future (2-3 years)? Please briefly elaborate.

6. If you use a 3rd party ad serving supplier (e.g. DoubleClick, OpenAdstream, AdManager…): if the price of 3rd ad serving services was to raise by 5-10% (all else equal) would you switch part of your inventory to an integrated network like Google AdSense?

7. Do you consider the cost of switching ad serving technology supplier to be high / moderate / low?

8. If you use more than one supplier of such technology/services, please describe briefly the advantages and disadvantages of such a solution compared to a situation in which only one supplier is used. Please also indicate why your company chose to use more than one supplier for this technology/services.

9. If you only have one supplier for this particular product/service, do you consider it possible/usefull using another supplier for a comparable product/service at the same time? If yes, please name these other possible suppliers. If not, please explain the reason why you choose single homing (e.g. exclusivity clauses, cost saving, quality of service …).

10. Please name other providers of display ad serving, management and reporting infrastructure technology that you consider as competitors of your provider/s at EEA level.

If you sell advertising space through direct sales

11. Which provider/s of display ad serving, management and reporting infrastructure technology is directly supplying your company?

12. Have you ever experienced a switch of supplier for this particular product/service? YES/NO
If yes, please:
explain the reason why you made such experience:
provide the name of your former supplier:
the name of the replacing supplier:
the cost caused by the switch:
the time it took to complete the switch

13. What is the % represented by the cost of ad serving in the total revenue generated by your advertising space? Please provide broad estimates.

If you sell advertising space through brokers/intermediaries/ad networks/ad exchanges
14. Which provider/s of display ad serving, management and reporting infrastructure technology is/are indirectly supplying your company?

15. Have you ever experienced a switch of supplier for this particular product/service? YES/NO
If yes, please:
Explain the reason why you had to switch:
provide the name of your former supplier:
the name of the replacing supplier:
the cost caused by the switch:
the time it took to complete the switch:

16. If you use the indirect channel, what is (a) the % represented by the cost of ad serving in the total revenue generated by your advertising space; (b) the % represented by intermediation fees in the total revenue generated by your advertising space? Please provide broad estimates.

17. If you multi-home, why have you become member of several ad networks?

C. Effects of the merger

18. According to you, is DoubleClick’s large publisher customer base an advantage for the quality of services offered by DoubleClick to publishers? In other words, is there a direct benefit to a publisher to use an ad serving supplier with a larger publisher base? If so, please briefly describe the benefit(s) (e.g. does the ad serving service improves the monetization of inventory if the ad server processes the data on user behaviour accross numerous publishers?).

19. If Google and DoubleClick were to merge, do you consider that integrated networks like Yahoo! (with RightMedia) and Microsoft (with aQuantive) would be able to provide strong competition to Google/DoubleClick? Please briefly elaborate.

20. Would you consider open source ad serving software as a viable alternative to commercial ad serving software? If so would you consider it suitable, in conjunction with a standalone ad network, as an alternative to Google’s AdSense? Please explain.

21. What are, in your view, the main effects of the proposed operation on:
a) your company?
b) the markets for (display and text) ad serving, management and reporting services for publishers?
c) the prices of (display and text) ad serving, management and reporting services for publishers?
Please give reasons for your answers.

22. Do you have any other comments that you wish to bring to the Commission’s attention?

Thank you for your assistance!
Please do not forget to add a non-confidential version to your response.

The Jones Day, Google/DoubleClick & FTC conflict of interest: a higher standard is required by the agency

Our lawyers are advising my organization on this matter, but I want to remind readers of one point. John Majoras of Jones Day is listed on its web site as the “Partner-in-Charge of business development in the Washington, D.C. Office and is a member of the Firmwide Business Development Committee.” [better read it now before Jones Day removes it!]

In that position, his role raises conflicts of interest with cases involving the FTC, in my opinion. With an issue involving the future of the Internet and the fate of digital media in a democracy, the highest standards are required. Chairman Majoras should have recused herself in this case. Jones Day should not have taken on DoubleClick as a client. Jones Day’s removal of the web pages discussing its role as advising DoubleClick in both the U.S. and EU raises serious questions about the firm’s activities in this merger case. There are so many key questions that must be publicly resolved. When did Jones Day begin representing DoubleClick? When did it announce, via its website, internal communications system, and through its representation with clients, regulators, and other outside parties, that it was representing DoubleClick? Did the FTC staff learn of the relationship between their boss’s husband’s law firm and the merger? (Please don’t tell me that such a relationship, even if spread informally, doesn’t have an impact on the proceeding.)

The public requires the highest standards of conduct from its public officials and leading law firms. This incident illustrates that more must be done to make such institutions accountable. Yesterday’s FOIA request by EPIC asking that the FTC provide it with all records related to its communications with Jones Day in this merger case (and related privacy issues) is a step in the direction of obtaining some sunshine.

Over the last six months, we have been focused on the business and privacy issues related to the Google and DoubleClick merger. We knew a huge lobbying operation was in effect, with Google having added significant political capacity in D.C., and various competitors (Microsoft, the phone companies, Yahoo!) jockeying for position. Our job at CDD was to provide some honest analysis about the realities of the online advertising business–its market structure, goals, and privacy threats. We didn’t have the time–nor the resources–to dig into the political aspects of the issue. Sadly, there was little serious journalism on the deal as well. But last Monday we decided to examine what role Jones Day was playing in the Google merger and learned–via its website–that it represented DoubleClick.

This case illustrates something we all know. That the big money and special interest nature of Washington politics is at odds with the concerns and needs of the average American. As I said, a higher standard is required–for public service, disclosure and intellectual rigor (something we believe the FTC has failed to do in this case and related privacy matters). It’s a story that not going away. That’s why we are writing about it–and keeping a watch as well!

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NYU Legal Ethics Expert Says FTC Chair Majoras should recuse in Google/Doubleclick review

Before we run this legal comment, we want to make something clear. This is about ensuring transparency and accountability in the process. It’s not about political ideology or trying to affect the outcome of a proceeding. There are standards that must be adhered to when one is serving the public (oh, and btw, the idea of disappearing web pages from the Jones Day website reflects, I suggest, their own ethical confusion as well). Here’s an important perspective from today’s Online Media Daily:

“Legal ethics expert Stephen Gillers, a professor at New York University Law School, maintains that there’s no question that Deborah Platt Majoras should recuse herself, regardless of whether Jones Day appeared before the FTC in the matter. John Majoras “stands to gain from the success of Jones Day, especially in a high-profile case like this and, therefore, her decision can affect his interest and therefore her interest,” Gillers said.”

“DoubleClick Law Firm Accused Of Concealing Involvement In Merger.” Wendy Davis. December 14, 2007

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The evolution of targeting users online (or, "Oh where oh where has our privacy gone")

An excerpt from a recent trade piece that should encourage reflection and concern (our emphasis):

“Today, we can not only target by the sites we think our customers frequent, we can follow them around the Web and target them based upon the other sites they actually visit. We can also target them based upon the words typed into a box, and from where those words are typed through search geo-targeting. We can also retarget searchers elsewhere on the Web. Facebook’s recent announcements take targeting to a whole new level, based upon age, location, interests, and other online activity.”

Source: “Search And Online Advertising: A Continual Evolution.” Ellen Siminoff. Search Insider. November 16, 2007

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Google’s Mobile Search Advertising Ambition: Control the Market

From Online Media Daily [“Google’s Mobile Ad Move Gets Everybody Talking.” Tameka Lee. September 14, 2007] excerpt:

The search giant “is acting fast to take control of the mobile search ad market–a crucial move if it expands as predicted,” said Silicon Alley Insider’s Dan Frommer. And with The Kelsey Group predicting mobile search to generate more than $1.4 billion in ad revenue by 2012, Google is trying to get a jump on what right now is anyone’s game.

Google had been testing mobile text ads since last year, but decided to expand the effort–informing all AdWords advertisers through emails that if they didn’t opt-out, their sponsored links would now be served to mobile searchers…

According to a Google spokesperson, the company went full-scale with mobile search ads, partly because of the sheer volume of mobile-ready ads in place, and because “the mobile space is an increasingly important part of how users are accessing information.

For Sale on Ebay: Your Online Privacy

eBay is working with behavioral targeting technologies, including a test “retargeting” users (that means electronically shadowing) as they visit AOL, MSN, clients of Yahoo’s RightMedia ad exchange and other sites (eBay has contracted with AOL’s Tacoda subsidiary, a behavioral targeting specialist). According to Behavioral Insider, eBay is using “a member’s on-site history to target relevant ads by its many Power Sellers.” As the publication explains, “[T]he world’s biggest online auction house knows a lot about its users’ bidding, browsing and buying habits, and now eBay is leveraging this knowledge in behavioral ad targeting both on and off the site.”

How is eBay tracking users? Here’s what Kasey Chappelle, director of eBay’s marketplace division, told the Insider: “Some of the things we are doing off-eBay involve retargeting where you are traveling to a site after being to eBay and we place an eBay ad there that is going to change depending on what you have done in the past on an eBay site.” eBay’s Scott Shipman explained that the kind of data used to track and target you includes… “category type of data, bidding data, the types of items you may be bidding on or browsing on within the eBay system… What we know about are items you are bidding and browsing and listing and selling in certain categories, so we can pass that information into a profile. When you are out on the Internet and are about to see an eBay ad we can associate that affinity with the ad.”

This, of course, raises serious personal privacy concerns. But while eBay is proclaiming that it’s protecting your privacy—it’s not really in our opinion. That’s because Ebay’s new so-called “AdChoice” privacy scheme is an opt-out service. According to the news report, one can “opt-out” of the system if eBay customers click on various links that then send them “directly to a page that lets then [sic] state a preference whether they want their eBay data used to target that ad to them.”

Here’s how eBay’s Shipman, who serves as its senior counsel, global privacy practice, explains it: “The eBay page explains the AdChoice program, that we care about your information and how you are targeted and marketed to. And if you would prefer that we don’t use your information to target ads to you, you can tell us that you would prefer a generic ad and not have ads targeted to you. And you opt out immediately.”

We placed a call to Mr. Shipman early yesterday, seeking an explanation of the opt-out scheme. But he did not return the call as of this posting.

eBay has been one of the leading companies promoting network neutrality–an open Internet. Protecting privacy is a key component of such an open and democratically-run online medium. Privacy shouldn’t be for sale–even on eBay.

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Yesterday, the FTC sent out a release announcing its November town meeting on online advertising and privacy. The hearing is in response to the formal complaint my group Center for Digital Democracy and the USPIRG filed last November.

It’s clear that the FTC is fearful of really tackling the privacy and consumer-manipulation problems intrinsic to the online ad field. Behavioral targeting, which we also address in our complaint, is just the tip of the proverbial data collection and target marketing iceberg. Policymakers at the FTC, the Congress, and state A-G’s must do a better job in addressing this problem. Chapter seven of my book covers the topic, along with recommendations. As we noted in our statement yesterday, CDD has given the staff at the FTC a ton of material since November, further making the case for immediate federal safeguards. There is so much at stake regarding the future of our (global) democratic culture and its relationship to online marketing. We hope others will join with us and raise the larger societal issues, in addition to the specific online ad marketplace concerns.

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