Groups Ask FTC to Probe Online Ad Profiling

By Ellen Nakashima
Washington Post Staff Writer
Thursday, November 2, 2006

Two consumer advocacy groups asked the Federal Trade Commission yesterday to investigate online advertising practices of Internet companies, asserting that the practices violate consumer privacy.

In a 50-page complaint, the D.C.-based Center for Digital Democracy and the U.S. Public Interest Research Group outlined online consumer tracking and profiling systems that they said are "deceptive and unfair to millions of users."

"Our online travels are increasingly becoming part of vast databases that comprise the source material for sophisticated analytical engines designed solely to make us more susceptible to online marketing," the complaint said.

The groups asked the FTC to investigate Microsoft Corp., Google Inc., Yahoo Inc. and other online companies and software firms, which they said were "aggressively" building new tools to analyze and classify consumers' behavior across the Internet and other digital media -- computers, cellphones, video games and televisions.

They singled out a Microsoft service that allows advertisers to take information gleaned from watching the millions of people who use the company's MSN Internet network. The information is combined with demographic data from credit bureaus and other sources to tailor ads to people based on geographic location, sex, age group, lifestyle and time of day. Microsoft's ad system "is deceptive and unfair," the report said.

The report also described new Web software programs that allow marketers to monitor people as they click and scroll online, logging where they enter a Web site, how long they linger on a page, even which part of the page they move their mouse across.

The groups urged the FTC to halt advertising practices that "abuse consumers" and to recommend federal legislation to protect them.

Mike Hintze, a senior attorney for Microsoft, said in an e-mail statement that "transparency" with consumers is "extremely important" and "will continue to be a central focus" of Microsoft's design of online services: "Consumer trust is essential to the success of online business and helping protect consumers' privacy is a top priority for Microsoft in our development and implementation of online services."

Google spokesman Barry Schnitt said that Google recognizes "that privacy is important" and that as it develops its advertising programs, it comes back "every time to the idea that the trust of the user is paramount." Yahoo spokeswoman Nissa Anklesaria said consumer trust and privacy were important and that the company had "a longstanding commitment to providing users with clear notice and choice" on the way their data is used.

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