Pandora targeted in smartphone privacy probe

By Laurie Segall, staff reporter

NEW YORK (CNNMoney) -- Internet radio service Pandora said Monday that it has been served a subpoena as part of a federal grand-jury investigation into the information being gathered and shared by popular iPhone and Android smartphone applications.

The disclosure came in an update to the forms Pandora filed in February to prepare for its its initial public offering.

"We were informed that we are not a specific target of the investigation, and we believe that similar subpoenas were issued on an industry-wide basis to the publishers of numerous other smartphone applications," the company said.

The probe comes as regulators and policymakers consider cracking down on data privacy and security. A seemingly constant stream of breaches, accidents and misfires have given the issue fresh visibility this year.

In its revised filing to the Securities and Exchange Commission, Pandora voiced concern that suggested privacy controls like the proposed "do not track" or "opt-in" mechanisms could impair its ability to collect data on its listeners -- a move that could dent its ad-supported business model.

"Restrictions on our ability to collect, access and harness listener data ... would in turn limit our ability to stream personalized music content to our listeners and offer targeted advertising opportunities to our advertising customers, each of which are critical to the success of our business," the company said in the filing.

Pandora's IPO filing offered the first public look into the 10-year-old company's finances. The Oakland, Calif.-based company isn't yet profitable.

In its latest fiscal year, which ended Jan. 31, Pandora posted a net loss of $1.8 million on revenue of $137.8 million, the company said in its updated SEC filing. One year earlier, Pandora had a net loss of $16.8 million on sales of $55.2 million.

With a user base that now tops 80 million, Pandora says it is averaging a new user every second To top of page

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