Verizon's Takeover Of AOL Raises 'Urgent Privacy Concerns,' Advocacy Group Says

Verizon's proposed $4.4 billion acquisition of AOL gives the Federal Communications Commission a new reason to impose privacy obligations on broadband providers. That's according to advocacy group Public Knowledge, which today called for the FCC to move forward with privacy regulations for Internet service providers.

“Whether or not the combination of a major online advertiser with the largest mobile services provider raises substantial antitrust concerns, it raises extremely substantial and urgent privacy concerns,” Public Knowledge Senior Vice President Harold Feld said in a statement.

Verizon's purchase of AOL is expected to give the company new ad technology capabilities, which could significantly boost its ad targeting efforts.

But even without AOL, Verizon's attempts to serve targeted ads have troubled advocates.

Feld points to Verizon's use of “super cookies” to track mobile users as evidence of the company's “alarming tendency to harvest private information from subscribers to bolster its foray into online advertising.”

He was referring to Verizon's controversial decision to inject tracking headers into mobile traffic on its network. Those headers allowed Verizon (and at least one outside ad network) to track consumers' mobile activity in order to serve them behaviorally targeted ads. The information collected via headers also enabled companies to recreate cookies that consumers deleted -- often because they thought that doing so would help them to avoid tracking.

Until recently, Verizon allowed its subscribers to opt out of receiving behaviorally targeted ads, but didn't allow people to avoid the header injections. The company changed its position earlier this year, and now allows subscribers to opt out of the headers, thanks to pressure by lawmakers.

Still, privacy advocates say that Verizon -- and other broadband providers -- should obtain people's explicit consent before using data about their Web activity for ad targeting purposes.

The FCC's recent decision to reclassify broadband as a utility service empowered the agency to also regulate how broadband providers protect consumers' privacy. The agency already requires telephone companies to protect consumers' private data, but the FCC says those restrictions won't necessarily translate to broadband, given the vast amount of Web-browsing data available to providers.

Last month, the FCC held a workshop addressing questions surrounding online privacy. At the time, much of the focus was on Verizon rival AT&T, which draws on wireline subscribers' data for ad targeting in two cities where it's rolling out Gigabit fiber service -- Austin, Texas and Kansas City.

Currently, the company seeks wireline subscribers' opt-in consent for ad targeting in those markets, but entices users to agree through its pricing structure. The company charges subscribers who agree to the targeting program $70 a month for 1 GB service. People who reject the program must pay $99 a month for their broadband service.

AT&T executive Robert Quinn recently defended that system at the FCC's privacy workshop, arguing that AT&T's model is comparable to that of developers who offer free, ad-supported apps and paid apps without ads. Some advocates, however, say that the price differential is turning privacy into a luxury service. 

Regulators at the FCC haven't yet said how they think broadband providers should treat information about consumers' online activity.

But privacy advocates have made clear that they hope the FCC imposes stringent rules. “Your broadband provider can see your every electronic bill-pay, your every online political contribution, and every website you visit or video you download,” Feld writes today. “Consumers deserve the same protection they currently enjoy for their private phone calls for their private online communications."

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