March 2, 2000 5:10 PM PST

DoubleClick postpones data-merging plan

Bowing to pressure from privacy advocates and consumers, online advertising giant DoubleClick today said it will hold off on plans to combine online and offline data that it collects on consumers.

"It is clear...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," DoubleClick CEO Kevin O'Connor said in a statement on the company's Web site.

In an interview, O'Connor said the decision was in response to feedback from hundreds of consumers regarding DoubleClick's plans to link specific names and addresses to data gathered through its extensive online advertising network--a move that raised the ire of privacy groups.

O'Connor said today's announcement does not mean the company has given up on the plan. Rather, he said, DoubleClick has pledged only to delay moving forward until new guidelines on privacy are hammered out between government and industry.

"The absence of standards has led to confusion and uncertainty," he said. "We need clarity to get rid of the uncertainty."

While privacy advocates today cautiously celebrated what they called a victory in their long-standing dispute with DoubleClick, some said there is a long way to go in guarding consumer privacy online.

"O'Connor said he's waiting for a consensus between industry and government," said Ari Schwartz, a spokesman for the Center for Democracy and Technology in Washington, D.C. "We think the public needs to be there in that debate, too. We've seen an outpouring of support on this issue far more than any other campaign we've done."

Pressure on DoubleClick to bolster its privacy policies has mounted since it completed a $1.7 billion merger late last year with data-collection agency Abacus Direct, a company that works with offline catalog companies.

Opponents of the merger worried that the deal would increase the likelihood of corporate abuse of customer data by combining Net surfing habits--obtained from the 5 billion ads DoubleClick serves per week--with personal information from the 2 billion transactions recorded by Abacus.

Those fears came to a head last month, when DoubleClick changed its privacy policy to allow the linking of its database of consumer profiles with data gleaned from electronic markers, known as cookies. It also said it would make that information available to members of a new advertising network called the Abacus Alliance.

Since then, DoubleClick has been hit with several lawsuits relating to alleged privacy violations. The Federal Trade Commission also is investigating DoubleClick's data-collection practices.

In a Feb. 14 filing with the Securities and Exchange Commission, DoubleClick disclosed that the FTC is investigating its handling of consumer information. At the time, the company's shares were trading around $110. The stock traded as high as $135 on Jan. 3.

Its shares fell $9, or 10 percent, to $79.81 yesterday after partners AltaVista and Kozmo.com backed away on concern about DoubleClick's handling of privacy issues.

At the 1 p.m. PST close of regular trading today, DoubleClick shares were up $2.88 to $83.44.

The focus for DoubleClick now turns to lobbying efforts on Capitol Hill as pressure on Congress grows to develop privacy legislation.

In January, DoubleClick hired Josh Isay, who gained a reputation on The Hill as a political whiz kid who helped mastermind the winning campaigns of Sens. Chuck Schumer (D-N.Y.) and Robert Torricelli (D-N.J.).

Isay, 29, joined DoubleClick as director of public policy and government affairs, taking over as lead lobbyist.

"He's young, but he's very highly regarded," said one privacy advocate who didn't want to be named.

Isay could not immediately be reached to comment on his strategy now that the New York advertising firm said it will wait for federal regulators and legislators to grapple with online privacy.

News.com's Patricia Jacobus contributed to this report.

 

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