Category: Revolving Door

Harvard’s Berkman Center, its online marketing industry connections, and the need to prominently disclose

The Berkman Center is well-known for its work on digital media issues.  But it has often failed to address–in its research and public work–the negative consequences of online marketing and interactive advertising.  Berkman is partially funded by leading online marketers–including Google and Microsoft.  When Berkman conducts research on such issues as children’s online marketing and privacy [an issue I am involved with], it should always prominently disclose on the first publication page its funding conflicts–including whether Berkman staff work with online marketers.  Berkman should tell Congress and the FTC about such conflicts when it submits research and testimony.

For example, Berkman’s faculty co-director John Palfrey works for a venture investing firm that financially backs behavioral targeting and other online marketing companies.  Professor Palfrey does disclose on his blog that in addition to his Harvard duties, he is also a “Venture Executive” at Highland Capital Partners.  Highland’s “Internet and Digital Team,” which Prof. Palfrey serves on, has one current investment in Affine Systems, a video targeting company. Affine’s Video Platform explains it enables marketers to engage in behavioral targeting:  “Affine integrates behavioral data from exchanges and exclusive third-party partnerships. This data is used to audit and optimize campaigns as they run. Detailed analytics are collected, and valuable retargeting data is generated with every campaign.”  [“What makes the Video Targeting Platform special is the amount of insight it provides…by taking advantage of the data provided by Affine’s data partners, you can even target specific demographic or psychographic groups, and reduce the waste that is currently expected from online video buys.”].  Highland also invests in search engine and interactive TV companies serving the China market and many others. [Given the investments in China’s online market by Mr. Palfrey’s company, it also raises questions about Berkman’s Global Network Initiative role evaluating how companies like Google and Yahoo operating in China and elsewhere address human rights].  Previous online marketing (and behavioral targeted related) investments made by Highland included the youth online targeting company Bolt, Coremetrics, and mobile ad targeting company Quattro.

The well-known online analyst and commentator Dana Boyd is a Fellow at Berkman, and has made it clear she also works for Microsoft Research.  But given Microsoft Advertising global efforts to extend the power of online marketing and personalized data collection, including its online ad research lab in Beijing, its support for neuromarketing in digital ads, and its extensive behavioral and online targeting apparatus–including for junk food targeting youth in its gaming divisions, we hope Ms. Boyd will more closely examine her employers work in the area.

Tim Muris, the Facebook Connection, and the FTC: The Need for Disclosure in the debate over Protecting Consumers Online

Former Bush FTC Chair Tim Muris is helping lead the charge against proposals that would ensure the FTC can be an effective consumer protection agency.  His critique of Obama and House-backed proposals in the financial reform bill that gives the FTC the ability to act on behalf of consumers is being cited by some in Congress.  Muris is trotting out the tired refrain that the FTC would not act responsibly if given the same rulemaking authority almost every federal agency has.  He suggests that the FTC would–horror!–actually protect children from junk food ads [1 out of every 3 kids in America is obese–and ads play a role] and also ensure our privacy is protected online.  When you think privacy, think about all the things you do using the Internet–involving your money, health, family/kids–and remember that digital marketers are eavesdropping on what you do–and selling that information to the highest bidder.

But two sources tell us that Mr. Muris is representing Facebook at the FTC–he is a lawyer at O’Melveny and Myers.  Facebook is now the subject of a FTC complaint by privacy groups, as well as the growing focus of data protection commissioners.  When Mr. Muris speaks about the FTC, especially his concerns that if given the ability to enact safeguard rules it would address privacy and online marketing, it is extremely relevant that he has at least one client allegedly involved.  During his tenure at the FTC, Mr. Muris relied primarily on industry self-regulation when it came to protecting privacy online.  That posture has resulted in consumers being victimized by a data collection “wild west,” which even industry now admits.  Facebook’s work with Mr. Muris places the social network service in the company of those working to defeat safeguards to protect America’s kids from ads that promote obesity. Given Facebook’s own growing role as a fast food advertiser, questions need to be raised about their involvement fighting FTC consumer protection proposals.  It is also another area where Mr. Muris needs to acknowledge his own commercial connections.

NAI New “Study” on Behavioral Targeting: Self-Defense for Privacy-Threatening Data Collection

The Network Advertising Initiative (NAI), the online ad industry’s toothless self-regulatory scheme–has released a report designed to undermine policy safeguards protecting consumer privacy.  The NAI engaged the services of Prof. J. Howard Beales--a former FTC official who largely supported self-regulation of online data collection during his tenure at the agency–to issue a study.  Not surprisingly–and something anyone who follows behavioral online advertising knows–is that these practices work.  When you track, collect, profile a consumer online and know their interests, background, location, you can make a better ad experience.  Privacy is only mentioned once in the report.   The study’s message is really that if it makes money, don’t think of protecting consumer privacy.   The NAI explained in a release that “Behaviorally targeted ads sell for twice the price and offer twice the effectiveness of normal run-of-network ads, significantly enhancing the advertising revenue engine driving the growth of the Internet.”

The suggestion that we should not be concerned about privacy even if these practices threaten consumer protection is absurd.  Anyone who suggests that we should permit a wholesale invasion of privacy (and more) because it helps support online publishing isn’t addressing the critical question.  How can we protect consumers and also have a robust online content system?  Both can–and must–be done.

Progress & Freedom Foundation Comes to Aid of Comcast/NBCU Deal [But Doesn’t Say it’s Funded by both Comcast and NBCU!]

Progress and Freedom Foundation’s Ken Ferree issued a press release today that, amazingly, claimed “the deal raises no general antitrust or diversity issue.”  But there was not a word or mea culpa that his salary is partly paid for by PFF’s supporters Comcast, NBCU and the cable industry.  Beyond the conflict question, there is also Mr. Ferree’s peculiar history with media consolidation.  He was Michael Powell’s chief staffer when the FCC tried to end all the media ownership safeguards.  Powell and his allies failed then to understand the complexities of the issue, which resulted in a huge public and political backlash.  It appears it’s rerun time!

Billy Tauzin, Wheeler dealer for PhRMA lobby and the Two-House MegaDeal Even Hollywood Wouldn’t Make

If you followed the career of Billy Tauzin while he was a power on the House Energy and Commerce Committee, you know that he supported further media & telecommunications deregulation, more media consolidation, and led an effort that would have undermined Internet network neutrality.  Tauzin, now head of the drug industry’s lobbying group PhRMA, recently brokered a sweet deal with the Obama White House on health care reform.  In order to secure support for a national heath care plan from a major industry lobbying group,  the Obama Administration agreed to a plan where drug manufactuers would provide some $80 billion in discounts and subsidies over the next ten years.  But the agreement, in my opinion, leaves the drug industry off the hook.

But here’s the Hollywood connection and why Tauzin’s wheeler-dealer skills have ended up working on behalf of PhRMA.  As Tauzin prepared to retire from Congress,  he sought much greener ($$$$) pastures, including taking over Jack Valenti’s role as head of the Motion Picture Association of America, MPAA.  According to Variety [Jan. 23, 2004], “negotiations between the MPAA and Tauzin had broken down because Tauzin wanted too much compensation. Valenti is one of the highest-paid lobbyists in Washington, pulling in more than $1 million a year, but Tauzin asked for hundreds of thousands of dollars more as well as a residence in both L.A. and New York.  “He was just over-reaching,” one source said.  Tauzin accepted “a more generous offer to become the pharmaceutical industry trade association’s top lobbyist…The offer from the Pharmaceutical Research and Manufacturers of America is said to be unprecedented for a Washington trade association. Tauzin currently chairs the House Energy and Commerce Committee, which oversees legislation affecting the telecom and media industries, as well as the pharmaceutical industry.”

In negotiating the deal with the Obama White House to protect the pharmaceutical industry from having to make meaningful contributions to national health care, Tauzin has clearly earned PhARMA’s “more generous offer” that trumped the MPAA.

Progress & Freedom Foundation Comes to Aid of its Data-Collecting Backers (Using a `save the newspapers’ as a ploy to permit violations of consumer privacy protection!)

This report from Internetnews.com on the Progress and Freedom Foundation’s “Congressional” briefing illustrates how desperate some online marketers are that a growing number of bi-partisan congressional leaders want to protect consumer privacy.  So it’s not surprising that some groups that are actually financially supported by the biggest online marketing data collectors in the world would hold a Hill event to help out the friends who pay their bills.

It should have been noted in Ken Corbin’s that Google, Microsoft, Time Warner (AOL), News Corp. (MySpace) financially back the Progress and Freedom Foundation (PFF).  Other behavioral data targeting `want to be’s’ who monopolize U.S. online and other platforms are also backers:  AT&T, Comcast, NBC, Disney/ABC, Viacom/MTV/Nick, etc. For a list, see here.

PFF and some of its allies deliberately distort the critique of consumer and privacy groups.  We are not opposed to online marketing and also understand and support its revenue role for online publishing.  But many of us do oppose as unfair to consumers a stealth-like data collection, profiling and ubiquitous tracking system that targets people online.  One would suppose that as a sort of quasi-libertarian organization, PFF would support individual rights.  But given all the financial support PFF gets from the major online data collectors, how the group addresses the consumer privacy issue must be viewed under the `special interests pays the bills’ lens.

PFF and its allies are playing the ‘save the newspaper’ card in their desperate attempt to undermine the call for lawmakers to protect consumer privacy.  Newspapers and online publishers should be in the forefront of supporting reader/user privacy; it enhances, not conflicts, with the First Amendment in the digital era.  Finally, PFF’s positions on media issues over the years has actually contributed to the present crisis where journalism is on the endangered species list.  This is a group that has worked to dismantle the FCC, eliminate rules designed to foster diverse media ownership, and undermine network neutrality.

PS:  The article quotes from Prof. Howard Beales of George Washington University (and a fCV,ormer Bush FTC official with oversight on privacy).  Prof. Beales was on the PFF panel.  Prof. Beales, according to his CV has served as a consultant to AOL and others (including  Primerica and the Mortgage Insurance Companies of America).  Time Warner, which owns AOL, is a PFF financial backer.  All this should have been noted in the press coverage.

Google’s NetPAC and Lobbying

Google’s Andrew McLaughlin is listed as the “designated agent” and “Assistant Treasurer for its “NetPAC” in a Federal Election Commission filing dated March 16, 2009.  It gave out $270,000 to federal candidates for the 2008 election cycle, according to the Center for Responsive Politics.  It’s a veritable political “who’s who” for those receiving the money, including the leading lawmakers overseeing policies that affect Google’s interest, including privacy and intellectual property. Among the recipients include Reps. Barton, Boucher, [now WH chief of staff] Rahm Emanuel, Markey, Speaker Pelosi, Sens. Dorgan, Durbin, Reid, Rockefeller, Smith, etc.

Money for the PAC came from Google execs such as Sergey Brin, David Drummond, Eric Schmidt, Vint Cerf, Mr. McLaughlin, Hal Varian and others.  It’s worth looking at the Center’s coverage of Google’s contributions.

Clearly, corporations and individuals have a right, within limits, to donate to campaigns.  But to me, Mr. McLaughlin’s role running Google’s PAC–as recently as this Spring–illustrates why such activity should be addressed by the White House’s new “Ethics Commitments” for personnel. This isn’t about Mr. McLaughlin or Google.  But no top political operative should be able to make a quick revolving door trip into a federal job that will be connected to their private sector role.

AT&T, Time Warner, Microsoft and Facebook Join New Business Group with Ties to Obama Administration

In the age of social media marketing, what may lobbying look like when the Lincoln Bedroom meets Web 2.0?  This new “progressive” business group will also have to address the special interest agendas of its members, including online marketing and data collection.

excerpt via PR Week about the launch of Business Forward:  The group’s wide-ranging roster includes AT&T, Facebook, Hilton, IBM, Microsoft, Pfizer, and Time Warner and was founded by Democratic strategists… The goal for Business Forward is to provide consistent support for President Barack Obama and the Democratic Congress.

National Journal reports that: Rather than lobbying, Business Forward’s initial aim will be hosting events around the country to focus on maximizing funds in the $787 billion economic stimulus package…It will be led by political operative Jim Doyle; former Viacom lobbyist David Sutphen, whose sister is Obama’s deputy chief of staff; former Obama media consultant Erik Smith; former Obama campaign staffer Julie Andreeff Jensen; and Hilary Rosen, former head of the Recording Industry Association of America. Business Forward’s founding members will pay up to $75,000 per year for a membership…

In a letter in Politico, Mr. Doyle explains that “We plan to spend our time encouraging business leaders to discuss how America can make the most of clean energy investments in our current budget, reduce hospital costs through better health care information technology and reform schools so that today’s students are better prepared for tomorrow’s jobs.”

FTC’s Behavioral Ad Principles–the last act of the Bush Administration? Why is the Obama White House Allowing the FTC To Remain Under the Leadership Appointed by Pres. Bush?

In a few hours, approximately between 10-11 am eastern, the FTC is expected to release its final “Online Behavioral Advertising Principles.” Originally released for comment in December 2007, the principles are a sort of Valentine’s Day present to the online ad industry from the (supposedly departed) Bush Administration.  From what we know, the FTC principles support self-regulation.  Online marketers will be told they should behave better–and here are suggestions.  It’s like a teacher telling a misbehaving student–‘behave better, dear,’ or else we will have to tell your parent (in this case, the guardian being potential congressional action).

My CDD urged Commissioners Harbour and Leibowitz to issue separate statements on the principles, and call for tougher requirements—especially in the area of so-called sensitive information.  This would include data connected to our financial and health related online activities (think mortgage and loan applications or queries for prescription drugs).  CDD and a coalition of groups also formally asked the commission to impose serious privacy safeguards for both children and adolescents.

But these principles were crafted within the narrow confines of the Bush Administration philosophy prevailing at the FTC.  Only self-regulation is permitted.  Consequently, such an approach likely means these rules leave the online data collection, profiling and targeted marketing system which comprise behavioral marketing off the privacy protection hook.

But one question looms at the moment.  Why has the new Obama administration allowed the FTC to remain under the leadership of Bush-appointee William E. Kovacic? The principles being issued today, in fact, reflect the “old” FTC, not one run under the philosophy of President Obama.  Why is the Obama White House failing to ensure a change of leadership at the FTC?  The agency is responsible for overseeing a huge portion of the economy, including critical financial issues.  It’s also supposed to be the leading agency on consumer protection issues.   The Obama White House should have–by now-found someone who would led the FTC, so it can better protect the public.

The principles being released today were only made possible because of the Bush FTC give-away to Google, when it approved its takeover of online ad giant DoubleClick.  CDD, the Electronic Privacy Information Center (EPIC), and USPIRG fought the merger, including on privacy grounds.  FTC Commissioner Pamela Harbour played a key role forcing the agency (then run by Chairwoman Majoris, whose husband’s law firm represented DoubleClick) to address the privacy concerns. As a consequence of the political pressure from its failure to seriously examine the consumer privacy issues of the Google deal, the FTC staff were told to develop these principles.

The next chair of the FTC needs to take privacy and online consumer protection issues seriously.  The agency does need more resources, but also a new spirit.  If the FTC had been on the job, and was examining how lending institutions were recklessly promoting loans and mortgages, maybe today’s mess wouldn’t be as tragic as it is.  More to come after the commission releases the principles.

FTC Revolving Door: From Director of Consumer Protection to Law firm Partner at “the premier provider of legal services to technology, life sciences”

Lydia Parnes has been the director of the Bureau of Consumer Protection at the FTC.  Think about where we are today in consumer protection–and the many problems we face.  Consider the role of the FTC on financial issues [the subprime market] to online privacy to youth obesity.  And then look at this January 13, 2009 press release from “Wilson Sonsini Goodrich & Rosati, the premier provider of legal services to technology, life sciences, and growth enterprises worldwide.”  Excerpt:

“…announced that Lydia Parnes will join the firm as a new partner in March. The current director of the Bureau of Consumer Protection (BCP) at the Federal Trade Commission (FTC), Parnes is a highly regarded expert in the field of consumer protection, particularly in the areas of privacy, data security, Internet advertising, and general advertising and marketing practices. She will be based in the firm’s Washington, D.C., office.

“The global regulatory climate has grown more stringent and complex, and we have seen an increasing need for expanded expertise on consumer-protection issues from our clients, especially those in the technology and digital media sectors,” said CEO John Roos. “As one of the country’s foremost consumer-protection officials, Lydia brings unparalleled experience to the firm’s regulatory practice when it comes to privacy, security, and other consumer concerns.”

We don’t believe government officials should immediately work for industry in the areas they regulated after leading the government.  They should pursue careers in academia or non-profit organizations, if possible.  As long as there is a revolving door of this sort, doubts about the ability of the FTC to protect consumers will continue.