• by Wendy Davis  @wendyndavis, August 5, 2011

More than 10 Internet service providers are redirecting search traffic on Yahoo and Bing, according to an explosive new report.

The report, which appeared in New Scientist and is based on research from the International Computer Science Institute in Berkeley, says the ISPs are sending users who search for brand names like "apple" directly to the marketers' sites rather than displaying the search engines' results pages.

The report says the ISPs are working with the company Paxfire for the initiative; ISPs and Paxfire allegedly have deals with affiliate marketers like ValueClick's Commission Junction, which get credit for taking users to the marketers' landing pages.

"A user who searched for 'apple' would easily have found the company's store via a search engine, so Apple may be needlessly sharing revenue with Commission Junction and the ISPs," states the report. "Search engines are also being deprived of traffic intended for them."

Paxfire and ValueClick have not returned messages from Online Media Daily seeking comment.

The New Scientist report says that ISPs recently stopped redirecting Google searches, but continue to redirect some searches for brand names on Bing and Yahoo. ISPs named in the report include Cavalier, Cogent, Frontier, Fuse, DirecPC, RCN and Wide Open West. Many ISPs have long returned pages populated with ad links when users type the wrong URL into the address bar; Paxfire powers that functionality for some ISPs. But the new report alleges that Paxfire and ISPs are redirecting search traffic -- even when users correctly type the names of companies into the search query box.

If so, ISPs are sharing users' search queries with outside companies -- which in itself raises privacy questions. Additionally, the ISPs' activity in redirecting users away from search engines appears to violate neutrality principles holding that consumers are entitled to access all lawful sites.

Concerns about the privacy and neutrality issues posed by the revelations will almost certainly result in a wave of litigation, not to mention scrutiny by regulators and Congress.

"If the allegations are true, I expect there will be lawsuits galore," says Eric Goldman, director of the High Tech Law Institute at Santa Clara University.

Already, digital rights groups like the Electronic Frontier Foundation are condemning the ISPs for engaging in browser "hijacking."

S. Derek Turner, research director of advocacy group Free Press, says the organization is still evaluating the report. "In the abstract, were a company to employ a practice of hijacking end users' browsers in order to block them from interacting with the search engine of their choice, that would appear to violate the FCC's open Internet rule, and would certainly violate the general principles of network neutrality."

The FCC's open Internet order bans ISPs from blocking traffic. That order was approved by a 3-2 vote last December, but has not yet gone into effect. ISPs have vowed to challenge the regulations in court.

One lawsuit dealing with the report's allegations was already filed on Thursday. That case, a potential class-action brought by RCN subscriber Betsy Feist, alleges that the ISP "knowingly and intentionally intercepted, monitored, marketed, and divulged" her search history to a third party.

Feist argues that Paxfile and RCN violated the federal wiretap law and various state laws. She also alleges that RCN violated its privacy policy.

RCN declined to comment for this article.

Several years ago, six ISPs partnered with defunct behavioral targeting company NebuAd to use deep-packet inspection technology to monitor subscribers' Web activity and serve targeted ads based on the data collected.

The emergence of NebuAd's targeting platform sparked congressional hearings and class-action lawsuits. Several of those cases, including one against NebuAd, remain pending.