January 22, 2001 5:35 PM PST

FTC drops probe into DoubleClick privacy practices

The Federal Trade Commission said Monday that it has closed its investigation of the data-collection practices of online advertising network DoubleClick, saying the company has not violated its privacy policy.

The investigation began in February 2000 after the company announced plans to combine consumer information collected online with personally identifiable customer data from its newly merged subsidiary, Abacus Direct. The point of compiling such dossiers is to better target advertisements to consumers as they surf the Web.

The government agency issued a letter Monday to DoubleClick's lawyers notifying them of the investigation's end. The investigation was launched primarily to determine whether DoubleClick, in its collection of online consumer habits, or "clickstream data," merged sensitive information from its subsidiary in violation of its privacy policy.

"The issue that triggered the investigation was a report that they were planning to combine offline information from Abacus with their clickstream data. However, this never took place," said FTC spokesman Eric London. "As a result, there was no violation of their privacy policy."

The investigation's close could break up the privacy storm clouds hovering over DoubleClick since it announced intentions to merge online and offline data. Although the ad network quickly reversed its position at the time, the investigation touched off a maelstrom of scrutiny from consumer advocates, media and legislators about data-collection practices on the Web.

Online storefronts and advertising networks alike were forced to react to heightened examination by bolstering their privacy practices and polices, as well as by hiring experts to defend the companies.

DoubleClick itself named a chief privacy officer in the past year and kicked off efforts to educate the public about online advertising practices.

"It's gratifying after the FTC spent 10 months doing a very thorough and technical evaluation of our business practices and our privacy policy to then have them drop the investigation," said DoubleClick Chief Executive Kevin Ryan.

Investors could take this as a positive sign as well. Although DoubleClick shares lost nearly 90 percent of their value last year--during a time of elevating concern about the viability of online advertising--the stock has gone up by almost 40 percent since Jan. 1 on positive fourth-quarter earnings.

Almost a year and a half after the $1.7 billion Abacus merger, DoubleClick is focused on building anonymous profiling products that take advantage of Abacus' wealth of data-mining capabilities without triggering further privacy problems.

The company has moved ahead with a handful of new products, including PredictiveMail, a combined e-mail and direct-mail marketing service, and an "intelligent" targeted advertising service that taps into a database of some 100 million anonymous online profiles.

In addition, DoubleClick plans to launch an anonymous customer profile service in March or April. The service, which DoubleClick says is in development, will gather information about Web surfers and match it to offline data from Abacus, keeping consumers anonymous.

Although Monday's FTC decision bodes well for DoubleClick's plans, the company is not completely in the clear.

"There are still literally dozens of lawsuits from state attorneys generals and class-action litigants against DoubleClick," said Jason Catlett, president of privacy group Junkbusters. "And they're not all going to give up just because the FTC closed their investigation."

The FTC's letter outlines steps that DoubleClick will take to update the next version of its privacy policy. The makeover will include information on the company's use of clear GIFs, or Web bugs; clarification on the opt-out cookie; and modifications to its Internet Address Finder Web site privacy policy that include more up-front guidelines on how data is sold.

 

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