Congress Questioning Company Involved In Charter Web Tracking Program

WASHINGTON, D.C. (AP) — Just days after an Internet click tracking program set to launch in Newtown was scrapped by Charter Communications, executives from major Internet players — Microsoft Corp, Google Inc, and Facebook Inc — were facing questions about online privacy in a Senate committee. But the company expected to get the most scrutiny was a small Silicon Valley startup called NebuAd Inc.

NebuAd has drawn fierce criticism from privacy advocates and government officials in recent weeks for working with Internet service providers, including Charter, to track the online behavior of their customers and then serve up targeted banner ads based on that behavior.

The tracking was set to begin in June in Newtown along with three other test communities: Fort Worth, Texas; San Luis Obispo, Calif.; and Oxford, Mass. When apprised of the issue by The Newtown Bee on May 20 after the newspaper received complaints from local subscribers and a computer expert who was following similar programs in the UK, Connecticut Attorney General Richard Blumenthal vowed to contact Charter officials “and challenge them to justify this potentially illegal practice.”

Two weeks ago, the cable, web, and communications conglomerate announced it was scrapping the program within hours of a high profile press conference where Mr Blumenthal publicly reiterated his concerns about the pilot program.

Mr Blumenthal said the practice, apparently targeting certain consumers in Connecticut and other areas of the country as part of a pilot, may have serious legal and privacy implications. Federal law bars cable companies from sharing subscriber information, the attorney general said.

“The arrangement raises strikingly significant questions, such as what other uses will be made of this highly sensitive information and what measures Charter Communications is taking to safeguard such information,” Mr Blumenthal said during the press conference. “I am very troubled about the legal and privacy implications, especially in light of longstanding federal law restricting cable company sharing of subscriber information.”

Prior to this week’s federal inquiries, Ari Schwartz, vice president of the Center for Democracy & Technology, a civil liberties group, said NebuAd’s business model raises many of the same concerns as an earlier generation of “adware” companies. Those companies developed software programs that — when downloaded to a computer — could track where a user went on the Internet and mine that information to deliver customized online ads.

Several NebuAd executives in fact were once employed by Gator Corp, an adware company that later renamed itself Claria Corp.

Privacy activists say adware companies duped many web surfers into downloading their software programs by bundling them with free screen savers, online games, and other Internet applications. But NebuAd has a new twist: It works directly with Internet service providers to scan their customers’ web surfing habits and deliver ads presumed to be of interest to them.

By injecting its monitoring in between consumers and the websites they visit, NebuAd’s technology could violate a 1986 federal wiretapping law that requires at least one party to a communication to consent to a wiretap, according to an analysis released July 8 by the Center for Democracy & Technology. British technologists have leveled similar criticisms against a NebuAd-like system being prepared in that country by Phorm Inc.

“This is analogous to AT&T listening to your phone calls all day in order to figure out what to sell you in the middle of dinner,” said Robert Topolski, a technology consultant to Public Knowledge and Free Press, two other public interest groups that have raised concerns about NebuAd.

Although no major Internet service providers are known to have partnered with NebuAd so far, a number of smaller ones have worked with the company, including Wide Open West, a privately held broadband company based in Denver.

Amid the publicity surrounding NebuAd, however, Wide Open West has stopped using the company’s advertising software. And other ISPs that had been planning to conduct trials with the technology, including Charter Communications Inc (CHTR), have put those plans on hold.

For its part, NebuAd has stressed that it does not collect any personally identifiable information about consumers and that it requires Internet service providers to notify their subscribers about its advertising system. On July 8, however, the Redwood City, Calif., company unveiled a new set of privacy protections, including an online notification system and an opt-out mechanism for consumers.

“NebuAd is committed to driving innovation in online advertising while pioneering industry-leading privacy practices,” NebuAd Chief Executive Bob Dykes said in a statement.

Besides NebuAd, this week’s hearing in the Senate Commerce Committee may also examine Facebook’s “Beacon” monitoring tool, which tracked online purchases made by Facebook members and sent alerts to their friends on the site.

In addition, the committee will explore the need for stronger online privacy protections in general. Among the issues on the table: whether Internet companies should be expected to make their programs “opt-in” (you are automatically excluded from a service unless you sign up) or whether “opt-out” (you are automatically in unless you speak up to say No) is acceptable.

“Monitoring consumer Internet browsing is a gross invasion of privacy for the sake of profit,” Mr Blumenthal said this week. “It threatens to make every consumer life an open book. Widely strewn to unknown websites and marketers would be highly sensitive and personal information such as medical conditions or family problems and financial interests.”

The attorney general said his ultimate concern is that every movement or activity by consumers on the Internet will be recorded, collected, and compiled into huge databases and then sold to marketers.

“Consumers will be bombarded with relentless and repeated advertising,” Mr Blumenthal said. “Their personal activities and interests will be exposed to potential security breaches, just as countless breaches nationwide have opened private confidential financial information to potential misuse and identity theft.”

While the committee has no online advertising legislation pending, the hearing could lead to new bills. The committee will also examine the potential role of agencies such as the Federal Trade Commission or the Federal Communications Commission. Last year, for example, the FTC released a set of proposed self-regulation guidelines for online advertising companies.

Witnesses testifying Wednesday included NebuAd’s Dykes, Microsoft associate general counsel Mike Hintze, Google chief privacy counsel Jane Horvath, and Facebook chief privacy officer Chris Kelly. Lydia Parnes, director of the consumer bureau for the Federal Trade Commission; Leslie Harris, chief executive of the Center for Democracy & Technology; and Clyde Wayne Crews, Jr, vice president for policy at the Competitive Enterprise Institute, were also scheduled to testify.

As the hearings commenced, Mr Blumenthal hailed the inquiry, calling for immediate federal action by a US Senate committee to stop Internet service providers and third-party marketers from tracking consumers’ Internet browsing activities.

(Newtown Bee Associate Editor John Voket contributed to this story.)