• by Wendy Davis  @wendyndavis, May 18, 2009

The closing came to light over the weekend, when lawyers filed a letter notifying U.S. District Court Judge Edward Chen in San Francisco about the closure. "From a company that once employed over 60 people, NebuAd now operates with a skeleton staff, and shortly, that too will disappear," wrote attorney Alan Himmelfarb.

Monday, NebuAd filed court papers confirming that it had assigned remaining assets to an entity that will pay off creditors.

Himmelfarb notified the court about the impending shutdown as part of a request to inspect NebuAd's documents and records before they are placed in storage. NebuAd's lawyer opposed that application, stating that NebuAd had moved files from its now-closed Redwood City office to another office in Foster City months before this lawsuit was filed.

Himmelfarb, of the law firm KamberEdelson, represents more than a dozen Web users who sued NebuAd in November for allegedly violating their privacy by purchasing information about their Web activity from Internet service providers and using that data to send targeted ads.

News of NebuAd's impending demise is not a huge surprise, considering that the company has been on deathwatch since last summer, when pressure from Congress forced it to retreat from its Internet service provider-based targeting platform. At around the same time, CEO Bob Dykes resigned and NebuAd laid off many of its employees. But a company spokesperson maintained at the time that NebuAd would regroup as a more conventional behavioral targeting company.

Consumer advocates said that NebuAd's Internet service provider-based platform presented a far more significant privacy threat than older forms of targeting because broadband companies have access to users' entire Web histories -- including search queries and activity at non-commercial sites. Older behavioral targeting companies only track users at a limited number of sites within a network.

NebuAd said that all data collected was anonymous in that it didn't know users' names, phone numbers or addresses, and didn't retain copies of their IP addresses. NebuAd also said it did not collect sensitive data, and that users would be able to opt out of the platform.

The pending lawsuit also names six Internet service providers as defendants. Those companies filed papers in February asking that the court dismiss the lawsuit against them on the grounds that NebuAd alone allegedly intercepted traffic, while they were merely passive participants in the plan.