• by Steve Smith , Staff Writer @popeyesm, February 13, 2014

Facebook appears to be (or wants to appear to be) cracking down on ad analytics partners that the social network says violate its data security and transparency policies. In a rare move, the company kicked two companies, HasOffers and Kontagent, from its Mobile Marketing Partner program. In an audit of data handling and other policies related to security and privacy, Facebook found the two vendors had violated terms of the partnership involving data retention and other issues. These vendors provide developers and advertisers with reports of app installs and app revenues from their Facebook presence. AdExchanger broke the story, which was confirmed publicly by Kontagent at least in a lengthy blog post from its CEO Andy Yang.

In a statement provided to AdExchanger, Facebook says a third-party audit revealed that these two companies had not adhered to partnership terms. “As a result, we’ve removed a couple of our partners from the program. We take our contracts seriously, and will continue to act swiftly anytime we find out they have been violated.”

No doubt scores of companies in the huge Facebook ad and app supply chain are reviewing their partnership agreements with the network.

While HasOffers has not issued a statement, Kontagent tried to manage the issue with a lengthy explanation and admission by the CEO Andy Yang. Yang writes that Kontagent was in error in storing data from the MMP program longer than Facebook allowed. Yang argues that the data was fully encrypted, which they say Facebook does not require. But he admits, “storing the encrypted data beyond the required timeframe was an error on our part and could have been easily resolved had we been given the opportunity to remedy the situation.” Yang says Facebook just notified Kontagent they were ending the partnership days ago.

Facebook also cited Kontagent for storing MMP data with other data collected, which the vendor also acknowledged. Facebook also noted that Kontagent's Terms of Service did not disclose properly to end users that this data was being collected. Kontagent also adds that the MMP program, which gives about a dozen analytics partners access to Facebook data for app installation and revenue tracking, was only a small part of their overall analytics business.

Facebook's move appears to be a get-tough policy that likely is designed to send a signal to partners and perhaps regulators that it is serious about data policies. As Yang points out, most of these violations of the partnership agreement probably could have been remedied without a public show of exclusion. In booting HasOffers especially, Facebook took aim at an analytics provider that has wide use. In a prepared statement that mobile marketing agency Fetch circulated to the press, their executive Guillaume Lelait says: “A large amount of big app developers have been using HasOffers Mobile app Tracking for attribution of all channels (including Facebook) for measurement.” A great many developers will have to find an alternative way of getting attribution data for their Facebook installs.

VentureBeat reports that the violations of data policies were not trivial. The HasOffers approach at least could result in giving some clients information that could personally identify a user. Attribution data could be combined with device identifier data to identify specific users.

Personally identifiable data has become something of a third rail in regulator arguments about privacy and data security issues online. Many of the guidelines issued by the FTC in recent years acknowledge that first parties like major media publishers can know the exact identity of users. But when it comes to third parties like ad networks and analytics providers, most of these companies and self-regulatory groups insist the user data circulated is carefully anonymized.

The app installation business has become one of Facebook's most successful forays into mobile advertising. Its use of social activity data to target users with relevant app ads on their devices is among the most effective channels that developers have to use paid media in order to rise from the clutter of available apps.

The MMP program now has eleven providers authorized to use Facebook data in tracking installs. They include Apsalar, Localytics, Cyberagent and Adways.