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Critics aim at DoubleClick
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March 6, 2000: 1:22 p.m. ET
Internet advertising firm is at center of Web privacy storm
By Staff Writer David Kleinbard
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NEW YORK (CNNfn) - The New York-based Internet advertising company DoubleClick Inc. has found itself at the center of the recent storm over privacy on the Web. Each time you surf the Web, there is a high chance that DoubleClick's computers will track your movements and serve you targeted advertising.
Through its $1.7 billion acquisition of the database marketing firm Abacus Direct last year, DoubleClick (DCLK: Research, Estimates) has the technology needed to match large volumes of data about people's Web surfing habits with personal information about them gathered from mail order catalogs and other offline sources. That combination alarms Web privacy advocates and has drawn attention from the Federal Trade Commission and two state attorneys general.
DoubleClick acts as the advertising sales force for about 790 Web-site publishers, using its relationships with 4,000 Web advertisers. In addition, DoubleClick has a technology called DART that enables companies to use pre-selected criteria to deliver precisely targeted ads to Web surfers. For example, if a person searches the Web portal AltaVista for the term "life insurance," the DART software will automatically serve the person an ad from a life insurance company. DoubleClick says it delivered nearly 30 billion ads to targeted Internet users in December 1999.
Through the use of text files called "cookies," DoubleClick can monitor which sites people visit, how often they return, and which pages they view on a site. The company knows which advertisements people have seen, how many times they have viewed each ad, and whether they clicked on an ad.
Advertisers love DoubleClick's ability to study consumers' buying patterns and track Web traffic. The company's revenue soared to $316.8 million last year from $26 million in 1996. At a recent share price of 95 3/4, DoubleClick has a market value of about $10.8 billion.
Until recently, DoubleClick gathered all of its information about Web traffic and advertising viewing patterns on an anonymous basis. The company's computers knew Web surfers only by their IP address and the type of browser software they used, not by name and address. In January, however, DoubleClick started to match Web surfing habits by name with information about consumers' offline purchasing habits gathered from the Abacus Direct database. The company hasn't yet served any ads based on information from Abacus.
The Abacus Direct database contains more than 88 million buyer profiles compiled from records of more than two billion catalog transactions. Abacus acts like a cooperative for mail order retailers; each member company contributes information about its customers to the database and then is allowed to extract information about other companies' customers from it. The potential combination of the very detailed personal information contained in the Abacus database with Web surfing habits identified by name alarms privacy advocates.
"By synchronizing cookies with name and address from e-mail, registrations, and e-commerce transactions, the merged company would have a surveillance database of Orwellian proportions," said Jason Catlett, president of Junkbusters, a Green Brook, N.J. privacy advocacy and consulting firm.
The FTC and the attorneys general in New York and Michigan launched separate inquiries into DoubleClick's data-collection practices, and the Electronic Privacy Information Center, a public interest research organization, filed a complaint with the FTC alleging that DoubleClick is unlawfully tracking the online activities of Internet users.
"We are looking to the FTC to see whether companies that break their promises and collect personal information in an unfair and deceptive manner will be held accountable," said Marc Rotenberg, EPIC's executive director.
On February 17, DoubleClick president Kevin Ryan issued a statement defending the company's practices.
"We are confident that our business policies are consistent with our privacy statement and beneficial to consumers and advertisers," the statement said. "The FTC has begun a series of inquiries into some of the most well-known Web companies, including DoubleClick, and we support their efforts to keep the Internet safe for consumers."
"It is DoubleClick's policy to only merge personally identifiable information with non-personally identifiable information for profiling after providing clear notice and choice," Ryan said.
On March 2, Ryan backpedaled by announcing that DoubleClick would delay its plan to link personally identifiable information to anonymous user activity across Web sites until the industry and government agree on privacy standards.
"It is clear that I made a mistake by planning to merge names with anonymous user activity across Web sites in the absence of government and industry privacy standards," Ryan said. "DoubleClick has not implemented this plan, and has never associated names, or any other personally identifiable information, with anonymous user activity across Web sites."
Simson Garfinkel, author of the book Database Nation and a privacy expert, said DoubleClick's actions show the problems with allowing the industry to regulate itself.
"Voluntary privacy policies are subject to change without notice," he said. "There is nothing to distinguish good players from bad players. It's difficult for companies to educate even their own employees as to what their privacy policies are." 
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DoubleClick
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