Consumer group seeks scrutiny of online data gathering

by TODD BISHOP, Seattle Post-Intelligencer

Citing privacy concerns, an online advocacy group wants the Federal Trade Commission to investigate the Internet industry's practice of targeting advertisements to Web users based on demographic information and online behavior.

In a complaint to be filed today, the Center for Digital Democracy asserts that many companies don't adequately disclose how they gather and use data about people who visit their sites. It singles out Microsoft Corp.'s advertising system for pointed criticism, citing the company's size and influence in the software industry.

"Current privacy disclosure policies are totally inadequate, failing to effectively inform users how and what data are being collected and used," the complaint says. It seeks rules requiring companies to get "affirmative consent" from people to use their personal information.

Microsoft disputed the group's assertion, saying that it is careful to protect the privacy of its users, and to explain what it does with the data it collects.

The company's new advertising system, adCenter, aims to compete with similar systems from Yahoo and Google. Among other things, adCenter lets advertisers target users based on browsing habits and data such as gender, age and location.

The system works in part by gleaning clues about users from the Microsoft sites they visit. It also uses personal data that people submit when they sign up for programs such as Hotmail and MSN Messenger, which require the use of Microsoft's log-in systems, Passport and Windows Live ID.

Microsoft points to a lengthy online privacy document in which it tells users that it may use the personal information it gathers about them to deliver "content and advertising that are customized to your interests and preferences."

"From what we have read, they have got it all wrong," said Mike Hintze, a Microsoft senior attorney for privacy, in a statement responding to the Center for Digital Democracy's assertions. "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."

Microsoft has faced complaints about privacy issues in the past, but it reached a settlement with the FTC in 2002 in which it agreed to reform its practices.

Claudia Bourne Farrell, an FTC spokeswoman, said any industry investigation resulting from the latest complaint would not be public while it was pending.

Jeff Chester, the center's executive director, acknowledged Microsoft's current privacy statement but said he doesn't believe it is specific enough about the company's online advertising practices. He said it's also not enough to merely link to a privacy statement online.

Chester said he believes online data collection threatens privacy even when done anonymously. "They may not know your name, but they know a tremendous amount about you."

article originally published at http://seattlepi.nwsource.com/business/290666_msftftc01.html.

The media's job is to interest the public in the public interest. -John Dewey