The State of Internet Privacy- March 2009

Posted by Dan Malachowski, Product Marketing Manager (Search and Performance Media)

March has been a busy month for online privacy.  The month started off with now-defunct Adzilla being sued in federal court for ISP-based (deep packet inspection) ad targeting.  Adzilla is being sued for allegedly violating wiretapping laws by looking into the web packets of customers of Adzilla’s partner ISPs without the customers’ knowledge.  The partner ISPs have also been named in the suit.  Adzilla stopped U.S. operations in October 2008 but is being sued for the money the company made while engaged in these ad-targeting practices.

Obama named privacy advocate Jon Leibowitz head of the FTC.  The tech-savvy Leibowitz is expected to scrutinize the online advertising industry and make sure ad companies are protecting consumer privacy.  We’ll see if Liebowitz continues the FTC’s push for ad industry self-regulation or takes a more regulatory approach.  In the meantime, Representative Rick Boucher (D-VA) is preparing a bill to regulate behavioral targeting.  Privacy legislation has also been introduced, but not yet passed, in Massachusetts, New York and Connecticut.  

Google made a splash with its beta launch of “interest-based” advertising on YouTube and the Google Content Network.  The ads categorize Internet users based on interests (such as sports, music or pets) associated with the types of sites and pages the user visits.  Users will not see interest-based ads for sensitive categories like health.  The news was released on Google’s Public Policy blog by Google’s Deputy General Counsel, Nicole Wong.  Wong stresses that the ads are transparent and provide consumers with an easy opt-out mechanism.  Users have a say in the type of ads they see by using Google’s new Ads Preference Manager.  With Ads Preference Manager, consumers can add/remove interest categories or opt-out of interest-based targeting completely.  ClickZ’s Rebecca Lieb calls Google’s interest-based ads “a model of decorum and simplicity” and “just what the FTC ordered” regarding consumer protection and privacy. 

In terms of industry self-regulation, the UK Interactive Advertising Bureau released its Good Practice Principles, the UK’s first self-regulatory guidelines for behavioral targeting.  Wong notes that Google’s interest-based ads clearly adhere to these, and similar, industry guidelines.  The UK guidelines highlight three main principles:

1.       Notice– The ad company must inform the Internet user that data is being collected.

2.       Choice– The consumer should be able to easily opt-out.

3.       Education– The ad company must inform the consumer how their information is being used and how they can opt out.

The action around Internet privacy in March hasn’t indicated if the industry will be allowed to self-regulate or if legislation will come down.  However, one thing is for sure- Internet privacy issues are center stage.

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