• by Emily Burg , November 3, 2006

The Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group (U.S. PIRG) have asked the Federal Trade Commission to investigate whether the online advertising practices of leading Internet companies like Yahoo, Microsoft and Google infringe on consumer privacy.

In their 50-page filing, the advocacy groups allege that the data collection and interactive marketing systems employed by online media companies "aggressively" track Internet user behavior, creating increasingly sophisticated and targeted data profiles, and are tantamount to violations of privacy. It also chastised the FTC for not being proactive enough in responding to these developments.

"Unfortunately, over the last several years, the FTC has largely ignored the critical developments of the electronic marketplace that have placed the privacy of every American at risk," Jeff Chester, CDD executive director, said in a statement.

"Current privacy policies are inadequate, failing to inform users what data are being collected and how that information will subsequently be used," the CDD and U.S. PIRG said, identifying four areas of particular concern: user tracking/Web analytics; behavioral targeting; audience segmentation and information gathering/data mining.

The advocacy groups in their complaint urge the FTC to protect consumers from unfair and deceptive practices by using its authority under Section 5 of the FTC Act to launch an immediate investigation into the online marketplace; expose practices that compromise user privacy; issue injunctions to halt current practices, and craft policies to prevent abuses.

In addition to posting their petition to the FTC online, the groups published an online guide called "Let the Browser Beware: A Tour of Online Advertising's Two-Way Mirrors," explaining the technology and methodology behind each category of online advertising.

Microsoft was singled out for its adCenter service, which allows advertisers to take information acquired from users of the MSN Internet network and combine it with demographic information to deliver advertising based on location, age, gender and other demographic and psychographic factors.

"We welcome the opportunity for a discussion about innovations in online advertising and how Microsoft's adCenter works in a way that protects consumers' privacy," said Mike Hintze, senior attorney for privacy at Microsoft, in an email to Marketing Daily, adding: "Consumer trust is essential to the success of online business and helping protect consumers' privacy is a top priority for Microsoft in our development and implementation of online services. We are very open about our privacy policies and practices across all of our online services and advertising products because we believe that providing consumers with this type of transparency and control is extremely important, and it will continue to be a central focus of how we design and deliver online services both now and in the future."