• by Wendy Davis , Staff Writer @wendyndavis, November 1, 2006

Two influential nonprofits this morning filed a complaint with the FTC asking for an investigation into online marketing practices, including behavioral targeting.

In its 50-page complaint, the Center for Digital Democracy and the U.S. Public Interest Research Group charge that marketing techniques, including serving ads to Web users based on the sites they've visited in the past, compromise people's privacy.

"The FTC should long ago have sounded a very public alarm--and called for action--concerning the data collection practices stemming from such fields as Web analytics, online advertising networks, behavioral targeting, and rich 'virtual reality' media, all of which threaten the privacy of the U.S. public," states the complaint.

The groups mention a host of companies and ad networks--including social networking site MySpace, ValueClick, Claria and AOL--but reserve their sharpest criticism for Microsoft and its paid search platform. Microsoft's relatively new adCenter platform promises marketers the ability to target search ads to users based on a myriad of data--an ability that the groups fear will hurt Web users.

"Microsoft has embarked on a wide-ranging data collection and targeting scheme that is deceptive and unfair to millions of users," alleges the complaint.

The San Jose Mercury News reported this morning that Microsoft disputed that characterization. Mike Hintze, a senior Microsoft attorney, wrote in an e-mail to the News: ''From what we have read, they have got it all wrong. Microsoft is committed to protecting consumers' privacy, and we are very open with consumers about our privacy policies and practices across all of our online services and all of our advertising products.''

The nonprofits allege that consumers aren't aware of the ways in which companies are tracking them and monitoring them online; without that knowledge, the complaint alleges, consumers are being unfairly manipulated. "Nowhere are users warned, however, that their movements are being digitally shadowed in this manner, nor that such information, coupled with behavioral targeting technologies, can be used to lure site visitors into seemingly irresistible commercial transactions," charges the complaint.

They also argue that online marketing techniques are harming people's privacy in intangible ways. "Missing in this new system of scrutiny, then, is the ability simply to browse anonymously, to window-shop, as it were, replicating online the right we've long enjoyed in real-world stores ('Just looking, thanks')--the right to be left alone."

In other words, the complaint says, companies are infringing on people's privacy even without knowing their names, addresses or other personally identifiable information.

In many ways, these claims aren't new. Watchdogs have been concerned about online privacy since companies first started using cookies to track Web users online. The issue resurfaced last year, with columnists like Walt Mossberg of The Wall Street Journalarguing for new legislation that would outlaw installing tracking cookies on users' computers without their affirmative consent.

Meanwhile, online analytics and ad companies have so far managed to forestall that type of legislation. They have also been remarkably quiet in public about their data collection practices. Despite the suggestion that industry executives should tout cookies to consumers, the industry actually has kept a low public profile on the issue.

But Jeffrey Chester, founder and executive director of the Center for Digital Democracy, has a history of effective Web-related advocacy. Consider, he was one of the driving forces behind the Children's Online Privacy Protection Act of 1998.

Online ad executives might have to reconsider whether to launch a public defense of cookies in light of his complaint.

It's that time of year again! You're invited to enter OMMA magazine's Agency of the Year awards for 2006. Click: https://www.mediapost.com/aoysub/ to submit your entry. Thank you.