There’s a “Great Digital Game” going on, where companies such as Google, Facebook, Microsoft and leading ad agencies compete to expand the clout of online marketing around the globe. As I told EU and other privacy regulators last Friday, the Obama Administration is being pressed by US online marketers to forge trade deals that will allow the leading companies to conduct business in the Asia-Pacific and EU region without worrying about serious privacy and consumer protection rules. I do think it’s ironic–and really misleading–to point to online marketing as a U.S. economic success story that requires special treatment. The revenues generated by Google, Facebook and the others are principally from advertising. Whether they are truly models of innovation that will bring the kind of sustainable long-term job and economic growth we need is questionable.
At the core of the “Great Digital Game”–where U.S. companies strive to dominate the global interactive ad marketplace–is data collection for user targeting. Microsoft, which has a principal online ad research facility in Beijing, was recently seeking a Senior Data Mining Analyst. Read this excerpt from the job description and think about privacy, civil liberties in China and other autocratic regimes, consumer protection and the ethical role of U.S. online ad companies: “Microsoft Ad Platform China is building world-class engineering teams in Beijing, focusing on online Ads related systems and services such as behavior targeting and advertiser analytics. The team partner closely with the Redmond Ad Platform team, enabling the discovery and inference of user profiles, intent and interaction while respecting privacy and trust, with the ultimate goal of maximizing benefits for users, advertisers and publishers…Core Job Responsibilities: Conduct and manage applied research and modeling work in the areas of user segmentation, profiling, and targeting. Research and experiment on data mining algorithms for user segmentation and dynamic segment expansion. Utilize data mining technologies and use various data sources, some of which may include MSN/Windows Live web usage, search query, demographic, subscription, and 3rd party data, to gain insight into Internet user behavior and intent that will set the foundation for Microsoft targeting offerings and data services. Provide complete solutions to business problems using data mining techniques, statistics and data analysis. Serve as subject matter expert and drive thought leadership in the areas of user profiling, ad targeting, and personalization for Microsoft online services.”
Google CEO Eric Schmidt gave the keynote address at the Interactive Advertising Bureau’s “Ecosystem 2.0” conference. As reported, he explained that [our emphasis]:
“The smartphone is the iconic device of our time,” Schmidt told the record IAB audience of 750 in Palm Springs, California. A year ago, he added, he predicted that mobile use would surpass PCs within two years. “It happened two weeks ago. And the PC is not going to catch up,” Schmidt said, as he labeled the new era, “Mobile First.”…The hyperlocal potential of mobile, Schmidt continued, means that smartphones and tablets bring a practical application to marketing that no other medium can match: A connection that will lead you to the store, open the door, and direct you to a product you need. “A RadioShack ad can tell you where you are and how to get to the nearest store.” And equipped with Near Field Communication chip (NFC), the newest generation of smartphones not only can tell you what to buy, it can enable a tap-and-pay transaction…Think of the offers mechanisms for advertisers,” Schmidt offered. “We’ve spent 20 years trying to get here. And now there’s an explosion in commerce. Particularly for the consumer who says, “I want to buy something and want to buy it right now,” he added, “We can do it.”
And, in large part, that capability means that mobile media consumption “is happening faster than all our internal predictions.”
Some 78% of smartphone internet users already use their smartphones as they shop. And, as consumer comfort with – and acceptance of – new mobile technology continues, Schmidt envisions “a world, in the very near future, where computers remember things and you never need to worry about forgetting anything. You want it to remember something and it will. And you’re never lost. No one is ever lost. You never turn off the [mobile device] and you’ll always know where you are. And where you want to go….”
[First in a series based on our FTC filing from 18 Feb. Excerpt]:
Consumers should be accorded the same kind of user opt-in control on first-party and third-party sites alike. First-party sites, it is clear, engage in a wide range of data collection and targeting approaches unknown even to their regular visitors, and user consent for these practices should be required. In addition, as first-party publishers increasingly engage in forms of data sales and sharing for the purposes of consumer tracking and targeting, the distinctions between first and third parties are eroding. …Turn, for example, operates a “data-driven†ad-targeting platform that “crunches 2000+ behavioral, contextual, inventory, and ad selection variables within 25 milliseconds… all to determine the right ad, right time, right price, and right audience.â€Â “Turn operates one of the largest marketing platforms on the Internet… ranked 6th in US audience reach, just behind companies like Google….† A recent research paper by TURN discusses how its “data mining solution enables marketers to cost-effectively identify interactions and variables of thousands of data points. It also allows them to look at the entire user profile at the time of impression receipt and do a thorough analysis of the impact of all the variables on a campaign (including latent variables which go beyond the audience segmentation and are often times overlooked).† Turn explains that its “secret sauce†is a “scalable infrastructure [that] enables us to read an individual user’s data profile from among hundreds of millions of profiles within a very small time frame, generally 2 or 3 milliseconds. And, we do this over 100,000 times a second (8+ billion times a day).†…
The company says in that statement that it “does not collect PII,†while saying that the following is only non-personal information: “…the IP address used to access the Internet, the type of browser used, which and how many Business Partner web pages have been viewed, search terms entered on Business Partner websites, referring/exit pages, and the date and time a Turn Ad was viewed.†In its discussion of the use of cookies and Web beacons, the company claims that such tracking and analysis isn’t personally identifiable. But the privacy policy and the claim that its targeting is all based on non-PII dta flies in the face of what its long list of “data partners†provide (let alone its own pronouncements on the ability to track and target an “entire user profileâ€). Its data partners include Bizo, IXI, TARGUSinfo, Polk, Datalogix, Almondnet, Bluekai and eXelate.
Bizo data provides “business demographics of a person which may include, but is not limited to job function, seniority, company size, industry, geography, etc.†IXI’s digital ad data enables online marketers to “target only the consumers that have the right financial profile for each offer and brand…. [with] real-time user classification capabilities…. [that] ranks online consumers based on their expected ability to pay their financial obligations… [and] provides a powerful, complete and accurate estimate of your prospects’ and customers’ total household income… [along with an] estimate of a household’s spending after accounting for the fixed expenses of life (housing, utilities, public transportation, personal insurance and pensions).â€Â  TARGUSinfo’s data includes “names, addresses, landline phone numbers, mobile phone numbers, email addresses, IP addresses and predictive attributes†(continually updated “10 times dailyâ€).  TARGUSinfo also facilitates the collection of “audience targeting data high-quality, offline attributes—including demographics, shopping behaviors, lifestyles, preferences and brand affinities—that are verified… to accurately identify Internet users and link them to attributes—such as demographics, buying behaviors and attitudes—in a real-time… manner…. enabling you to target the most relevant ad to every user regardless of location or media buying methodology.† “AdAdvisor services use cookies that give you a window to rich, predictive data on over50 million unique US users.â€Â Polk can provide “consumer detail (e.g., age, household income, gender), phone numbers, email addresses,†along with “comprehensive customer profiles with unique automotive variables…. The number of registered vehicles in a household, When a household will likely be in the market for their next vehicle purchase, How much will likely be spent on the next vehicle purchase,†and “reliable and extensive ethnic data including those with the highest levels of purchasing power—Hispanics and Asians.† Datalogix, “a source for real-world data for online targeting†uses “tens of millions of …Affiniti Cookies to support online targeting.† “DataLogix’ audience platform is powered by a database with over $1 trillion dollars in consumer spending behavior.† “Available data spans hundreds of product categories and a host of recency, frequency and monetary value data elements.† AlmondNet “partner(s) with Data-Owners & Media-Owners to facilitate the delivery of relevant, targeted (based on recently-conducted searches for products/services) ads to consumers wherever they go…,†“…based on their observed online behavior wherever they may be found.† “[O]ur technology collects information about Users from our data partners, and from Users as they visit our partner web sites.â€
For Immediate Release:Â Feb. 18, 2011
Child, Health and Consumer Advocates Ask FTC for Teen Privacy Protections, including Do-Not-Track and No Behavioral Targeting
Today a Coalition of Child, Health and Consumer Advocates filed comments on the Federal Trade Commission’s proposed privacy framework asking for increased privacy protections for adolescents.  The coalition includes leading advocates such as the Center for Digital Democracy, the American Academy of Child and Adolescent Psychiatry, American Academy of Pediatrics, Children Now, and the Consumer Federation of America.
Privacy protections are needed as teens are increasingly subjected to privacy invasions online. Teens are using new media technologies for key social interactions and to explore their identities. This increased use of digital media subjects them to wholesale data collection and profiling of even their most intimate interactions with friends, family, and schools. Meanwhile, recent research in psychology and neuroscience reveals that teens are more prone to risky behavior when their anxieties and peer relations are exploited. Privacy protections are needed to keep the online world social and safe.
Companies should not use data to behaviorally profile teens. The framework should also provide enhanced choice for adolescents, including a Do Not Track feature. In implementing “privacy by design,†companies should consider the needs and vulnerabilities of teens. They should address those vulnerabilities by, for example, minimizing the amount of data collected from teens. Data that is collected should be retained for only short periods and should be afforded greater security.
“Teens live online today,†said Guilherme Roschke, attorney for CDD. “This time of development and maturation requires privacy protections. Teens cannot go it alone against the vast data collection and profiling infrastructure of new media technologies that not even adults can understand.â€
“Because of their avid use of new media, adolescents are primary targets for digital marketing,†explained co-signer Kathryn C. Montgomery, Ph.D. “The unprecedented ability of digital technologies to track and profile individuals across the media landscape, and to engage in sophisticated forms of targeting, puts these young people at special risk of compromising their privacy.â€
The full coalition includes:
Center for Digital Democracy, American Academy of Child and Adolescent Psychiatry, American Academy of Pediatrics, Berkeley Media Studies Group, a project of the Public Health Institute, Children Now, Consumer Federation of America, Consumer Watchdog, David VB Britt, Retired CEO, Sesame Workshop, Ellen Wartella, Kathryn Montgomery, National Policy & Legal Analysis Network to Prevent Childhood Obesity, a project of Public Health Law & Policy, The Praxis Project, Privacy Rights Clearinghouse, Public Good, Public Health Institute, Tamara R. Piety, and World Privacy Forum
Guilherme Roschke
Staff Attorney / Fellow
Institute for Public Representation
First Amendment and Media Center
Georgetown University Law Center
T:(202) 662-9543
F:(202) 662-9634
gcr22@law.georgetown.edu
http://www.law.georgetown.edu/clinics/ipr/
**********
Just as the FTC and (we assume) the Commerce Department’s Internet Policy Task Force are examining what the new safeguards should be for sensitive data involving online health marketing, there is an important new research study in the Journal of the American Medical Infomatics Association. As Information Weekreports, the study “examined 10 diabetes-focused social networking sites [and] found that the quality of clinical information, as well as privacy policies, significantly varied across these sites. The study, “Social but safe? Quality and safety of diabetes-related online social networks,” was conducted by researchers in the Children’s Hospital Boston informatics program…and found that only 50% presented content consistent with diabetes science and clinical practice. The research…also revealed that sites lacked scientific accuracy and other safeguards such as personal health information privacy protection, effective internal and external review processes, and appropriate advertising.”
The study underscores the issues raised by CDD and its colleague privacy and consumer protections groups last November in a complaint filed at the FTC.
Here’s an excerpt via Politico from their interview with Department of Commerce NTIA Chief–and potential privacy policy maven–Lawrence Strickling. Note the absence of consumers in his description of the problem and issues. The Commerce Department, which is jockeying to have a greater role in the privacy debate (which the largest data collectors like because they are afraid of the consumer watchdog-minded FTC), better start making consumer needs come first–if they are to have any credibility here in the U.S. and with the EU.  It appears from the interview the Commerce Department has largely made up its mind to rely on “voluntary enforceable codes of conduct.”  Here’s what Larry said in a Q & A:
NTIA is also getting into the privacy discussions.
It’s part of the larger Internet Policy Task Force that’s underway here at Commerce where our agency — along with other agencies — is looking at a number of Internet policy issues. Privacy is first and foremost on the list, but we’re also looking at the protection of intellectual property, cybersecurity, and we’ll be looking at the free flow of information. For Commerce, our theme links all these topics around the notion of innovation, preserving the job creation and business expansion aspects of the Internet and trying to protect that going forward. So in the area of privacy, the task force did issue the green paper late last year. Comments just came in on that, so people are starting to work their way through them, with the goal that we’ll take the green paper and turn it into a more final pronouncement of the Department of Commerce or perhaps even the administration’s policy on privacy later this spring.
Do you think there should be a government office specifically dedicated to privacy?
We certainly believe that if we’re going to move forward with these voluntary enforceable codes of conduct with the industry that the function of convening and organizing that process should sit [in the government]. Our believe is that the Department of Commerce, and in particular NTIA, is the appropriate place for that function to reside. When we start talking about offices that sounds more bureaucratic and maybe requires departmental administrative orders. But on the issue of making sure that function is done, yes, based on what we see in the comments, we think that’s an appropriate idea. We think it’s a necessary idea in terms of working with industry and we’ll see how this all plays out over the course of the spring.
What is NTIA doing internationally on the privacy front?
Privacy has big international implications because the Council of Europe is looking at redoing what they’ve done in privacy. The European Union is looking at this issue. OECD is looking at the issue. So we’re very cognizant of the need to make sure our policy, whatever it is, is designed in a way to best harmonize with what’s happening in the rest of the world, and in particularly Europe.
The U.S.’s larger marketing, advertising and media lobbying organizations want the Obama Administration to help them continue to engage in behavioral data profiling and other digital marketing techniques without meaningful safeguards. Trade groups–including the Direct Marketing Association, Interactive Ad Bureau, and the 4A’s– told the Obama Commerce Department it wants it to negotiate a trade deal with the EU and elsewhere that would give U.S. online ad companies, in essence, a free pass on data collection and tracking. Can you believe they want U.S. self-regulation (ineffective and a cover to permit the expansion of consumer data collection) to be the global standard. File this under digital Chutzpah! They wrote in a [my emphasis] filing:
We support the Department’s recommendation that the U.S. government continue to develop a framework for mutual recognition of an international data privacy framework. The Department has an important role in representing and advocating for the interests of American businesses. We believe that the Department has the experience and expertise needed not only to represent the interests of U.S. industry, but to lead the global privacy policy debate. We recommend that the Department advocate for a global framework consistent with U.S. privacy standards, including the Self-Regulatory Principles for Online Behavioral Advertising, which have allowed U.S. companies to lead the world in innovation and to remain economically competitive. In addition to decreasing regulatory barriers to trade and commerce, global interoperability should promote—or at a minimum not impede—economic competition and innovation. We believe the U.S. approach to privacy policy meets these goals.
Here’s who signed the filing. Attention EU–watch out. And a question for the Obama Administration. Which side of the keeping the online medium a real reflection of democratic potential will you be on?
American Advertising Federation
American Association of Advertising Agencies
ASAE
Association of National Advertisers
Coalition for Healthcare Communications
Direct Marketing Association
Electronic Retailing Association
Interactive Advertising Bureau
MPA — The Association of Magazine Media
National Business Coalition on E-Commerce and Privacy
Newspaper Association of America
Performance Marketing Association
TechAmerica
From Pandora’s recent S-1 IPO filing at the SEC [our bold]:
excerpt: Existing privacy-related laws and regulations are evolving and subject to potentially differing interpretations, and various federal and state legislative and regulatory bodies may expand current or enact new laws regarding privacy and data security-related matters. We may find it necessary or desirable to join self-regulatory bodies or other privacy-related organizations that require compliance with their rules pertaining to privacy and data security. We also may be bound by contractual obligations that limit our ability to collect, use, disclose, and leverage listener data and to derive economic value from it. New laws, amendments to or re-interpretations of existing laws, rules of self-regulatory bodies, industry standards and contractual obligations, as well as changes in our listeners’ expectations and demands regarding privacy and data security, may limit our ability to collect, use, and disclose, and to leverage and derive economic value from listener data. We may also be required to expend significant resources to adapt to these changes and to develop new ways to deliver relevant advertising or otherwise provide value to our advertisers. In particular, government regulators have proposed “do not track†mechanisms, and requirements that users affirmatively “opt-in†to certain types of data collection that, if enacted into law or adopted by self-regulatory bodies or as part of industry standards, could significantly hinder our ability to collect and use data relating to listeners. Restrictions on our ability to collect, access and harness listener data, or to use or disclose listener data or any profiles that we develop using such data, would in turn limit our ability to stream personalized music content to our listeners and offer targeted advertising opportunities to our advertising customers, each of which are critical to the success of our business...
We use DoubleClick’s ad-serving platform to deliver and monitor ads for our service. There can be no assurance that our agreement with DoubleClick, which is owned by Google, will be extended or renewed upon expiration, that we will be able to extend or renew our agreement with DoubleClick on terms and conditions favorable to us or that we could identify another alternative vendor to take its place. Our agreement with DoubleClick also allows DoubleClick to terminate our relationship before the expiration of the agreement on the occurrence of certain events, including if DoubleClick determines that our use of its service could damage or cause injury to DoubleClick or reflect unfavorably on DoubleClick’s reputation….In fiscal 2010 and the nine months ended October 31, 2010, advertising revenue accounted for 90.9% and 86.4%, respectively, of our total revenue, and we expect that advertising will comprise a substantial majority of revenue for the foreseeable future. In fiscal 2010 and the nine months ended October 31, 2010, Google accounted for 11.4% and 7.4%, respectively, of our total revenue. We deliver online ads provided by Google through our service, and Google sources us with advertising customers through ad exchanges.
As was done during the 1990’s by the online marketing industry to oppose consumer privacy rules at the FTC and eleswhere, once again digital advertising companies disingenuously claim that enacting appropriate privacy safeguards will [as Google puts it]: “thwart the ability of companies to develop new services and tools, and in turn make U.S. Internet companies less competitive globally and make the Internet a less robust medium….an anti-innovation framework would counterproductively choke off the development of new tools and services to protect personal privacy.â€Â Facebook similarly told the industry-friendly Commerce Department that “imposing burden privacy restrictions could limit Facebook’s ability to innovate, making it harder for Facebook to compete...” The facts—as Google, Facebook and the other companies undoubtedly know—show this to not be the case. First, online marketers, including Google, did not build-in serious privacy and consumer protection safeguards into their online marketing products. All the innovation has and is focused on expanding the data collection, profiling and targeting of each user, across multiple platforms and applications.  Google, Yahoo, Microsoft, Facebook, ad agencies and digital marketing companies have significantly invested in creating new forms of digital data collection and new ways to measure it. That point is something that the industry doesn’t volunteer and that regulators and policymakers should recognize. It has taken a global public uproar and governmental pressure that has forced Google, Facebook and the entire online ad industry to more seriously acknowledge and respond to concerns on privacy practices. (In fact, it was only due to the pressure brought by CDD, EPIC and colleagues opposing Google’s acquisition of DoubleClick that forced the FTC to issue new staff proposals for behavioral advertising and privacy. Pressure from NGOs has been a key factor on industry and policymakers).
The U.S. is the global leader in developing and deploying online advertising applications and data targeting technologies. It sets the standard in the E.U, Asia Pacific, South America and elsewhere. Once the FTC establishes its new Framework, and as the EU revises its own to reflect contemporary online commercial data collection techniques, U.S. online marketers can engage in the same spirit of innovation that will make their online products and practices truly privacy friendly. The FTC, the White House and Congress should not permit Google and other digital marketers to invoke the term “innovation†as it was some magic political talisman that automatically will choke-off reasonable consumer privacy policy safeguards. Its time to set aside the self-serving claims that privacy safeguards will undermine innovation. Indeed, it is common sense to also admit that once consumers know that their privacy is respected, there will be greater confidence in e-commerce and online marketing generally. But many in the online ad lobby are afraid that if a consumer is honestly told about the digital marketing process, including the tactics used to harvest their data, an aware public will be wary of the online system. They will undoubtedly be concerned–but it’s an excellent reason to work together and enact new serious public policies that ensure consumers are fairly treated in the digital marketplace.
PS: In Facebook’s privacy filing it cites President Obama’s State of the Union speech where he singled out Facebook and Google as examples of innovation in the U.S. We doubt the President intended Facebook to use his speech as a political tool arguing against protecting consumers online through privacy regulation. Everyone should read Facebook’s submission–especially Facebook users. It is one of the most self-serving and narrow-minded policy screeds I have read recently. They invoke the concept of the “social web” as if it should automatically permit Facebook to be a consumer protection free- zone. Note in the document how Facebook urges the FTC (which is likely investigating it as we speak) to “continue to pursue a retrained approach to enforcement.” How wonder it just hired another lobbyist--a former Bush White House top staffer.
Ms. Huffington’s HuffPost used behavioral targeting and other forms of interactive marketing to help make the news site successful. At HuffPost, the privacy issues involved with such practices were never seriously addressed. But now Ms. Huffington has a new role as the editorial executive for AOL’s content service.  But AOL is engaged in extensive and manipulative forms of behavioral targeting–including the pervasive online targeting of teens, African Americans, health and medical consumers and patients, for financial service products, etc. Like other online marketers, AOL claims such online tracking, profiling and targeting isn’t really personally identifiable–which is both inaccurate and deceptive. We challenge Ms. Huffington to engage in a serious journalistic investigation of AOL’s privacy practices and redress them. There should be absolutely no targeting of adolescents. Behavioral targeting of African-Americans, financial and health products should be by prior opt-in consent only. Ms. Huffington should be held responsible for AOL’s privacy and online marketing practices–and we expect her to address them as she increasingly plays a greater leadership role in the online ad industry. Meanwhile, here’s what AOL says it does using behavioral targeting focused on African-Americans:
Behavioral. Target consumers based on their interests:
Black Voices. People who visit Black Voices for the latest in news, entertainment, sports, lifestyle, careers, money and more.
You can target the following subsections of the Black Voices audience:
Auto Intenders. In-market car, truck or motorcycle shoppers who are looking for specific makes and models. They read reviews, look at pricing and features, and research financing options.
Die Hard Sports Fans. Dedicated fans who follow professional and collegiate sports, stay on top of player rankings, and shop for sports memorabilia.
Entertainment Buffs. People who follow the latest news about celebrities, movies, music and soaps. They purchase DVDs, music and video games online and also take an active interest in memorabilia.
Money Minders. Affluent, older individuals who are seeking online financial advice, checking the performance of their investments, getting tax advice, planning their retirement and researching insurance options.
Moviegoers. Movie buffs who read the latest reviews, follow celebrity gossip and purchase tickets/DVDs online.
Travelers. Personal and business travelers who are interested in travel advice and deals. They use the internet to purchase airline tickets, book accommodations, make car reservations and research financing options.
Accurate. Pinpoint your customers with other powerful targeting solutions:
Develop a custom audience segment modeled after visitors to your site (Look-Alike Modeling).
Find African American households that have the greatest propensity to purchase specific products or brands (MRI Lifestyle Clusters).
If you’re sponsoring an AOL page, retarget consumers who have visited it (Sponsorship LeadBack).
Find your ideal African American audiences on the sites they are most likely to visit (Subnet Targeting).
Find AOL members who have selected the AOL Black Voices Welcome Screen as their homepage option, or who have indicated (through third party data) that someone in their household is of African American ethnicity (Audience Rosters).
and its behavioral targeting of consumers looking for mortgages and other financial products:
Behavioral. Target consumers based on their interests:
Business Decision Maker. Individuals with an active interest in business news and strategy.
Money Minders. Affluent, older individuals who are seeking online financial advice, checking the performance of their investments, getting tax advice, planning their retirement and researching insurance options.
Real Estate Intender. In-market individuals looking to buy, sell or rent property.
Small Business Owner. Small business professionals shopping for real estate, health care and office and computer equipment.
Investors. Affluent individuals who read business news, evaluate stocks, seek financial advice and conduct trades online.
Insurance Intender. Individuals seeking information about life, auto, home or health insurance.
Mortgage Intender. Individuals seeking information about mortgage rates and/or home loans.
and AOL’s adolescent targeting [for shame!]: Behavioral. Target consumers based on their interests:
Active Gamers. Teens and adults looking for online and console game strategies, tracking game release dates and purchasing video games.
Television Watchers. Individuals who keep up with their favorite television shows via TV network sites and online communities.
Style Mavens. Trend-focused women interested in the latest fashion, jewelry, and health and beauty items. They like to feel as good as they look by also paying attention to diet and fitness.Â
AIM Audience. Individuals who have visited AIM properties.