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self regulation vs. government regulation
Here's additional fodder for our upcoming discussion on self regulation vs.
government regulation.
AltaVista said it changed its policies during the weekend and won't release
personal information about customers unless they explicitly give permission.
The switch to an "opt-in" model for data sharing, if embraced by other Web
portals, could have major implications for DoubleClick and the rest of the
fledgling Internet advertising industry.
_____________________________________
AltaVista, Kozmo Distance Themselves From DoubleClick Over Privacy Worries
By GLENN R. SIMPSON and ANDREA PETERSEN
Staff Reporters of THE WALL STREET JOURNAL
Two corporate partners of DoubleClick Inc. distanced themselves from the
Internet advertising firm, in part out of concern about its handling of
privacy issues.
Internet search-engine company AltaVista Co. has quietly moved to limit the
release of customer information to DoubleClick and other Web companies with
which AltaVista has content partnerships, while Internet home-delivery
service Kozmo.com Inc. accelerated steps to end its partnership with
DoubleClick.
The moves are more fallout from the consumer-privacy problems facing
DoubleClick, New York, after privacy activists charged the company's efforts
to accumulate data about consumer Web-surfing habits are illegal. The
Federal Trade Commission recently launched an investigation of the company's
practices, and Michigan sued it, charging violations of the state's
consumer-protection law.
After word of DoubleClick's privacy headaches surfaced a few weeks ago,
Kozmo's founder and chief executive, Joseph Park, fired off an e-mail
message to his technology chief telling him to dump the company, which
Kozmo, New York, used to serve its Internet banner ads.
No More Banner Ads
"I told our tech people that until the dust settles, we should use someone
else," Mr. Park said. "If there's technology out there that is invading
people's privacy, we're totally against that." But Kozmo already had decided
to stop using DoubleClick's technology as part of a relaunch of its Web site
next month, he said. Kozmo no longer will carry banner ads, which produce
little revenue, he said.
A Washington group active on privacy issues, the Center for Democracy and
Technology (www.cdt.org5), said it recently warned Kozmo the titles of
videos rented by its customers were being shipped to DoubleClick. The group
said the practice is a potential violation of the federal Video Privacy
Protection Act. It detailed the alleged transfer of titles in a letter to
the FTC and demanded the commission investigate. Kozmo insisted it doesn't
share such information.
Kozmo's Mr. Park said privacy concerns did hasten the end of the
partnership, but he never was worried about the possibility of being in
violation of a federal law. "All of that information is in our own
databases," he said. "DoubleClick doesn't touch that."
A DoubleClick official, Jeff Epstein, also said the company hasn't collected
information on titles rented by customers of Kozmo, which home-delivers
rented video, music, and food.
Customers to Give Permission
Leading search engine AltaVista, Palo Alto, Calif., which accounts for about
20% of DoubleClick revenue, said it changed its policies during the weekend
and won't release personal information about customers unless they
explicitly give permission. The switch to an "opt-in" model for data
sharing, if embraced by other Web portals, could have major implications for
DoubleClick and the rest of the fledgling Internet advertising industry.
DoubleClick primarily acts as an ad-sales agent for AltaVista, a unit of
CMGI Inc., Andover, Mass., and that aspect of the relationship between the
two companies won't directly be affected. AltaVista also is an Internet
portal with its own membership, so the ability of DoubleClick and other
advertisers to personally target AltaVista members with specific ads will be
limited. Other Internet ad agencies affected by AltaVista's decision are
CMGI's AdForce and Flycast units.
AltaVista's decision "definitely is not good news" for the Internet
advertising industry, said Internet strategist Bill Whyman of Legg Mason
Inc. "Customer data is key to the business model for anyone who has
advertising revenue," he said. The decision "is not an atom bomb, but it's
another sign the privacy bar is being raised, and that makes it harder for
companies to make money."
'Natural Evolution'
AltaVista spokesman David Emanuel said the opt-in policy was part of a
"natural evolution" at the company.
The Center for Democracy and Technology's letter to the FTC alleges Kozmo
and another Web site send highly personal information to DoubleClick. "When
individuals search for video titles or place an order for a video rental,
this information is sent to DoubleClick," the group asserted. In addition,
the group said, a Web site "that provides consumers with financial services
such as tax preparation, salary and mortgage tests, and account management
uses DoubleClick ads. When individuals enter salary and debt information at
this site it is being relayed to DoubleClick." The second site wasn't named.
DoubleClick's Mr. Epstein said the company isn't collecting such
information, although some such material may be being transmitted over the
Internet because of the way information is passed back and forth under the
basic architecture of the Web. When the information gets to DoubleClick, it
merely "bounces off," he said, adding the firm never has loaded any such
information into its databases and has no intention of doing so.
"It has nothing to do with Kozmo, or with DoubleClick; it's how the Internet
works," he said. The Center for Democracy and Technology "is objecting to
the fundamental way the Internet works."
Write to Glenn R. Simpson at glenn.simpson@wsj.com7 and Andrea Petersen at
andrea.petersen@wsj.com8
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