Month: December 2009

CDD & Consumer Watchdog ask FTC to Block Google/AdMob Deal and also Protect Mobile Consumer Privacy

News Release
Monday, Dec. 28, 2009

Two Consumer Groups Ask FTC To Block Google’s $750 million Purchase Of AdMob
Deal to Buy Mobile Advertising Company Is Anti-Competitive And Raises Privacy Concerns

WASHINGTON, DC — Two consumer groups today asked the Federal Trade Commission to block Google’s $750 million deal to buy AdMob, a mobile advertising company, on anti-trust grounds. In addition, the groups said, the proposed acquisition raises privacy concerns that the Commission must address.

In a joint letter to the FTC, Consumer Watchdog and the Center for Digital Democracy (CDD) said Google is simply buying its way to dominance in the mobile advertising market, diminishing competition to the detriment of consumers.

“The mobile sector is the next frontier of the digital revolution. Without vigorous competition and strong privacy guarantees this vital and growing segment of the online economy will be stifled,” wrote  John M. Simpson, consumer advocate at Consumer Watchdog  and CDD Executive Director Jeffery A. Chester. “Consumers will face higher prices, less innovation and fewer choices.  The FTC should conduct the appropriate investigation, block the proposed Google/AdMob deal, and also address the privacy issues.”

Last week Google said the FTC has made a so-called “second request” for additional information about the deal indicating the commission is scrutinizing the proposal in great detail.

Besides the anti-trust issues, the letter from the two non-partisan, non-profit groups said, a combined Google/AdMob raises substantial privacy concerns.  Both AdMob and Google gather tremendous amounts of data about consumers’ online behavior, including their location.  AdMob, for example, targets consumers using a wide range of methods, including behavioral, ethnicity, age and gender, and education. In addition to its extensive mobile ad apparatus, Google also provides mobile advertising and data driven analytical services through its DoubleClick subsidiary.  The consolidation of AdMob into Google would provide significant amounts of data for tracking, profiling and targeting U.S. mobile consumers.

Read the letter here: http://www.consumerwatchdog.org/resources/LtrFTCfinal.pdf

“Permitting the expansion of mobile advertising through the combination of these two market leaders without requiring privacy guarantees poses a serious threat to consumers,” the letter said.  It noted that earlier this year several consumer groups, including CDD, petitioned the FTC to specifically protect consumer privacy on mobile phones, especially involving mobile advertising.

Initially Google was able to obtain its dominance in online search advertising largely because of innovative efforts.  It then moved into display advertising through the acquisition of DoubleClick. When the FTC approved that acquisition, the Commission said it would watch developments in Internet advertising closely. Since that deal was approved, the online and mobile ad markets have evolved substantially, with Google becoming more dominant in the Internet ad market.

“The proposed Google/AdMob deal offers the FTC an opportunity to check Google’s increasingly anticompetitive behavior,” Simpson said. “This deal is yet one more example of Google attempting to eliminate a threat to its power.”   “The FTC must protect competition and personal privacy in the key mobile sector,” noted Chester.

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Facebook and Privacy: Why the FTC and EU Have to Become Our Real “Privacy Wizards”

Facebook is a very valuable tool.  But its effort to harness more of its member data–and cloak it as a “privacy” approach–illustrates how out of touch Facebook is with the fundamental concept of personal privacy.  That’s why the FTC and EU Privacy commissioners have to step in and act as Facebook’s true “privacy wizard.“  Left on its own, with its business interests driving Facebook to make our information available to them and their business partners, the privacy of 100 million US users (and even more globally) are at risk.  Facebook cavalier approach that your “name, gender, current city, networks, Friend List and Pages” is considered by them “publicly available information” illustrates this.  Facebook has framed these changes as beneficial to users, claiming that its “new, simplified privacy settings giver you more control over the information you share.”   Classic PR doublespeak with a Silicon Valley accent.

We have raised concerns about Facebook in the past–especially with Beacon and also with the third party apps (my CDD played a leading role providing information on the data collected by third party applications to the leading Canadian privacy group).   I asked Facebook officials to brief me and other privacy groups on the recent changes: that briefing was on Wednesday.  I wanted Facebook to explain how its new privacy approach allowed its users to control data mined by Facebook and its third party developers used for interactive advertising and marketing. I was so appalled by what Facebook officials said at that meeting that, after some additional research into Facebook’s plans, my Center for Digital Democracy decided to join with EPIC and others in a complaint to the Federal Trade Commission.

I was flabbergasted to hear Facebook officials claim that its new changes actually reflected “Fair Information Principles” for privacy. That in their view the concept of privacy has “evolved,” with users wanting to share all their information via what they call the “social graf.” Facebook officials said that only a few people (implying privacy advocates) wanted to have control over their information. That they didn’t consider allowing users to control the data collected on them for marketing and advertising purposes as part of a privacy regime.  Data used for advertising–even to Minors–is considered outside of what a person should be able to control, in Facebook’s view.   They also suggested that those who didn’t appreciate what they called its privacy “permission” model were out of step.

Nothing was said by Facebook officials about the company’s real motivations for expanding its access to its user data (as if business reasons had nothing to do with Facebook’s approach to member privacy!).  As InsideFacebook recently explained, “Last week, Facebook launched a major initiative geared towards getting users to share more information more openly…However, while many people don’t want to share much information publicly online today, some do. For those people, Facebook’s historical default privacy settings did not make it the right product for them. As a result, Facebook recognized that its default-private model made it vulnerable to other services with default-public models, like Twitter…Facebook’s decision to make the recommended privacy options for profile data like “Family and Relationships” and “Posts I Create” be set to “Everyone” – as well as its move to remove privacy controls for Gender, Current City, and Friends – were pretty aggressive by almost anyone’s standards. In particular, its decision to present users with a binary choice between “Everyone” and “Old Settings” for some privacy preferences was especially confusingly executed…Facebook isn’t satisfied with a mostly-private platform: it wants to be the single place where both sensitive personal information is shared and public memes spread…Facebook has shown, as recently as a few months ago with its launch of the “real-time” stream as the default News Feed, followed by its decision a few months later to go back to the algorithmic News Feed, that it is capable of making suboptimal product decisions due to intense feelings about services like Twitter…”

Relevant too are Facebook’s plans to enable its third party developers to gain access to more of its member data, including their email addresses.  As Facebook explains on its “Roadmap” for developers, “We’re excited to announce that you will soon have the ability to ask users for their primary Facebook email addresses, providing you with a direct channel to communicate with your users.” At our briefing, Facebook officials said they were soon addressing third party apps and their access to data.  But given Facebook’s failure to protect basic user privacy, we have serious doubts it will deal with data access by its developers.

CDD will be working to educate the FTC, EU privacy officials and others.  Facebook is consciously devaluing the notion of privacy for its own interests.  How Facebook deals with user data–including what is used for advertising–will be on the policy agenda.  The complaint from EPIC, Consumer Federation of America, Privacy Rights Clearinghouse, CDD and others opens the door for a serious examination of Facebook’s data collection practices.

CDD Joins Facebook FTC Complaint

“Facebook’s new policy has seriously eroded the privacy rights of its members,” explained Jeff Chester, executive director of the Center for Digital Democracy (CDD).  “The leading social network has not acted responsibly.  It cannot be permitted to deliberately weaken the control its users have over their information,  just because it may boost its bottom line.  We call on the FTC to swiftly act on this complaint to protect the more than 100 million U.S. members of Facebook.”

CNN uses Neuromarketing to Help Advertisers on its news site

The lead ad in the Dec. 14, 2009 print edition of Brandweek is from CNN.com touting its “more effective ad units.”  The trade ad from the “#1 news homepage” says that it tested its ad products using “objective biometric and eye tracking researching.”   CNN engaged the services of neuromarketer Innerscope Research and its co-founder, Harvard professor Dr. Carl Marci.  Innerscope just became the first “neuroscience- based biometric company validated by the Advertising Research Foundation’s [ARF] review process.”  According to ARF, Innerscope:
 “Addresses all levels of impact and response to media with its capabilities;
• Combines well-developed, biological-psychological concepts and theories with both scientifically-validated tools and creative approaches to research problems;
• Delivers “superb” scientific and analytic expertise, with a scientific approach that supports a consistent, thorough validation program;
• Provides results that are reliable and valid, helping clients to make proper advertising and marketing decisions; and
• Possesses tools and methods that can be used for any communication element, including hard-to-measure areas such as product placement, ads in video games and social media.” 

Among the proven benefits to advertisers of its interactive ad units (based on this research) says CNN.com in its Brandweek ad are:
“17% increase in thought and processing; 21% higher emotional engagement; 22% better recognition; 31%  faster recognition; 50% increase in thought and processing; 56% higher emotional engagement.”

Online Financial Marketing, Subprime Loans, Digital Banking & Neuromarketing–Why We Need the Consumer Protection Financial Agency

How we handle our money–including credit, loans and banking–is moving online.  Digital marketing of mortgages, credit cards, student loans and other financial products will become the dominant way we relate to banking and related services.  The CEO of Capital One has already said that ” [A] mobile phone is just a credit card with an antenna.”  So called M-commerce (mobile commerce) will be a crucial avenue where we actually apply for credit on “the fly,” so to speak, with our cell phones themselves used to buy products.   Banks and other financial companies are using Facebook, other social media, online video, Twitter, search engines and interactive online marketing techniques to sell their services to consumers.  They are also using digital media in PR campaigns designed to make consumers forget about their unethical behaviors which led to the current fiscal crisis.

Financial services companies are even using so-called neuromarketing–testing messages via fMRIs, for example–to help hone their marketing messages.  Neurofocus, a Nielsen backed company that helps create digital and other ads based on brainwave research, released a study  earlier this year that “dived deep into test subjects subconscious minds to discover their hidden, unspoken beliefs and feelings about financial institution brands.” They “tested consumers in its laboratory to determine exactly what financial brand messages they responded to best, at the deep subconscious level of their minds, where brand perceptions, brand loyalty, and purchase intent are truly formed.”  Financial marketers are also using behavioral targeting online, which stealthily collects data on us for tracking and target marketing. That’s why we keep seeing ads for credit cards and other money-related products.  The information gathered as we fill in forms on the Internet  can be sold as part of the online lead generation business.  Online lead generation played a role in the subprime debacle, as consumers provided marketers with personal information that helped trigger pitches for mortgages and other credit.

Alternet has just published my article on these issues.  It can be found here.

Microsoft’s latest Neuromarketing Research for its Xbox LIVE: Tracking “brain activity, breathing rate, head motion heart rate, blink rate and skin temperature”

Microsoft, Google and Yahoo, among many others, are using the latest tools from neuroscience to hone their interactive marketing services.  Microsoft released its latest neurmarketing “groundbreaking “study yesterday, which used “neuroscience to compare Xbox LIVE to traditional video…”  Here’s an excerpt from the release:

In the study, Microsoft and Initiative, a division of Mediabrands, measured advertising effectiveness across media types and explored how neuroscience technologies can help answer two questions that marketers have asked for years: how to measure audience engagement with their brand and how to measure advertising impact across several media types.

This pilot study, conducted by EmSense, a leading neuroscience company, involved two of Initiative’s clients, Hyundai and Kia Motors, in which test subjects were exposed to various media and advertising campaigns from the companies while wearing a special sensor-laden headset. The headset tracked brain activity, breathing rate, head motion, heart rate, blink rate and skin temperature. Test subjects were also asked to take a post-exposure survey.

The Xbox LIVE campaigns consisted of interactive billboards that users could click through to a branded landing page where they could then interact with content and download videos. The traditional videos used in this study included a 30-second television spot for Hyundai and a 60-second in-theater spot for Kia Motors America.

The results showed more time spent, greater recall and higher levels of emotional and cognitive response in association with the Xbox LIVE ad campaigns than with the traditional video spots. The interactive capabilities of Xbox LIVE enabled an additional 238 seconds of engagement beyond the traditional video ad, which lead to increased unaided recall and brand awareness. For example, the Xbox LIVE ads delivered 90 percent unaided brand recall, compared with 78 percent unaided brand recall rates for the 60-second spot. In addition, the Xbox LIVE ads delivered higher levels of both cognitive and emotional responses.

“We know from our standard performance metrics that our Xbox LIVE campaign is effective,” said Michael Hayes, executive vice president, managing director of Digital, Initiative. “What’s compelling about this research is that we now know that consumers are making an emotional connection with Kia Motors America as well.”

Even more compelling is the methodology that allows brands to compare impact and engagement across multiple measures and across a variety of media types…said Mark Kroese, general manager of the Microsoft Advertising Business Group, Entertainment & Devices Division, Microsoft. “…If we can crack the code on this, marketers and advertisers will be able to pinpoint ROI by media type and know which campaigns are yielding the greatest impact.”

Consumer and Privacy Groups at FTC Roundtable to Call for Decisive Agency Action

Washington, DC, December 6, 2009 – On Monday December 7, 2009, consumer representatives and privacy experts speaking at the first of three Federal Trade Commission (FTC) Exploring Privacy Roundtable Series will call on the agency to adopt new policies to protect consumer privacy in today’s digitized world. Consumer and privacy groups, as well as academics and policymakers, have increasingly looked to the FTC to ensure that Americans have control over how their information is collected and used.

The groups have asked the Commission to issue a comprehensive set of Fair Information Principles for the digital era, and to abandon its previous notice and choice model, which is not effective for consumer privacy protection.

Specifically, at the Roundtable on Monday, consumer panelists and privacy experts will call on the FTC to stop relying on industry privacy self-regulation because of its long history of failure. Last September, a number of consumer groups provided Congressional leaders and the FTC a detailed blueprint of pro-active measures designed to protect privacy, available at: http://www.democraticmedia.org/release/privacy-release-20090901.

These measures include giving individuals the right to see, have a copy of, and delete any information about them; ensuring that the use of consumer data for any credit, employment, insurance, or governmental purpose or for redlining is prohibited; and ensuring that websites should only initially collect and use data from consumers for a 24-hour period, with the exception of information categorized as sensitive, which should not be collected at all. The groups have also requested that the FTC establish a Do Not Track registry.

Quotes from Monday’s panelists:

Marc Rotenberg, EPIC: “There is an urgent need for the Federal Trade Commission to address the growing threat to consumer privacy.  The Commission must hold accountable those companies that collect and use personal information. Self-regulation has clearly failed.”

Jeff Chester, Center for Digital Democracy: “Consumers increasingly confront a sophisticated and pervasive data collection apparatus that can profile, track and target them online. The Obama FTC must quickly act to protect the privacy of Americans,including information related to their finances, health, and ethnicity.”

Susan Grant, Consumer Federation of America: “It’s time to recognize privacy as a fundamental human right and create a public policy framework that requires that right to be respected,” said Susan Grant, Director of Consumer Protection at Consumer Federation of America. “Rather than stifling innovation, this will spur innovative ways to make the marketplace work better for consumers and businesses.”

Pam Dixon, World Privacy Forum: “Self-regulation of commercial data brokers has been utterly ineffective to protect consumers. It’s not just bad actors who sell personal information ranging from mental health information, medical status, income, religious and ethnic status, and the like. The sale of personal information is a routine business model for many in corporate America, and neither consumers nor policymakers are aware of the amount of trafficking in personal information. It’s time to tame the wild west with laws that incorporate the principles of the Fair Credit Reporting Act to ensure transparency, accountability, and consumer control.”

Written statements and other materials for the roundtable panelists are available at the following links:

CDD/USPIRG: http://www.democraticmedia.org/node/419

WPF: http://www.worldprivacyforum.org/pdf/WPF_Comments_FTC_110609fs.pdf

CFA: http://www.consumerfed.org/elements/www.consumerfed.org/File/5%20Myths%20about%20Online%20Behavioral%20Advertising%2011_12_09.pdf

EPIC: www.epic.org

Google’s Teracent Acquisition: Why so-called `Smart’ Ads are on the privacy agenda

Yahoo has its smart ad product; now with its acquisition of Teracent so does Google.  Smart ads learn about you and can dynamically change form so the display ad can better target you.  Here’s how Google explained what the technology can do:

Teracent’s technology can pick and choose from literally thousands of creative elements of a display ad in real-time — tweaking images, products, messages or colors. These elements can be optimized depending on factors like geographic location, language, the content of the website, the time of day or the past performance of different ads.

This technology can help advertisers get better results from their display ad campaigns. In turn, this enables publishers to make more money from their ad space and delivers web users better ads and more ad-funded web content.

We’re looking forward to welcoming the Teracent team to Google and to making this technology available to our display advertising clients — including those who run display ad campaigns on the Google Content Network and our DoubleClick clients.

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!

Comcast’s Pathetic “Public Interest” Commitments to Regulators for its NBCU Deal

Comcast released a memo this morning summarizing what it will promise regulators in order to win approval of its NBCU mega-deal with GE.   It’s a laughable document that demonstrates a cable monopolist mentality.  As the country’s most powerful cable and residential broadband company, they likely feel that they don’t have to really  provide a serious array of public interest commitments.   Even though the broadcasting business is in transition, and film distribution is changing, the sale of NBCU to what is arguably the dominant TV giant isn’t on its own a meaningful public interest benefit.  Indeed, the recent history of media consolidation in the U.S. is one that has actually harmed the public–through cutbacks in news and public affairs, more tabloid programming and higher cable TV rates, for example.

Comcast’s memo today [available via here] says nothing on the key (and crucial) issue of network neutrality and online programming access.  Nor are there any  safeguards for privacy and interactive ads, meaningful concrete funding commitments for local and national news,  and support for truly diverse (non-Comcast/NBCU owned) minority programming.   Today, Comcast demonstrated it’s only fit to perhaps be allowed to operate Comedy Central.