April 17, 2007 7:00 PM PDT
Privacy concerns dog Google-DoubleClick deal
How will the search-advertising powerhouse treat the massive amounts of data it already stores on people's search histories, once it also has at its disposal a storehouse of data on people's surfing habits from DoubleClick, the No. 1 digital ad-serving company?
Specifically, will Google combine the two data systems to map not only what someone searches for, but also which sites they visit, videos they watch and ads they click across the Web in order to better target marketers' promotions?
"It leaves too much personal information about all of us in one company's hands--Google's," said Jeff Chester, founder and executive director of the Center for Digital Democracy, a privacy watchdog. The CDD has called on the Federal Trade Commission and European Union to stop the merger for privacy and anticompetitive concerns.
On Monday, Microsoft (which reportedly was also in talks to acquire DoubleClick) and AT&T stoked those fears and also asked the FTC to examine the merger for anticompetitive issues around online advertising.
Google says such fears are unwarranted. (The deal is expected to close later this year.) When asked about such worries Tuesday at the Web 2.0 Expo in San Francisco, Google CEO Eric Schmidt replied that the company recognizes the importance of privacy and making people comfortable with its practices. He speculated that Google could create an opt-in system for consumers or maintain separate data storehouses.
"It's a legitimate concern. If we lose our advertisers' support or end-user support, the company goes kaput," Schmidt said.
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Nicole Wong, Google's deputy general counsel, said in a statement that "users will benefit from our commitment to protecting user privacy following the acquisition." She told the Los Angeles Times that the company hopes to merge the "nonpersonally identifiable data" from Google and DoubleClick to better target ads. She said that could help prevent consumers from being bombarded with repetitive promotions. Personally identifiable data like names and e-mail addresses will be kept apart.
Schmidt and Wong's assurances notwithstanding, privacy advocates worry that Google's vision for protecting users' personal information on the Web, and therefore its privacy policies and practices, haven't yet caught up with the breakneck pace of the company's expansion. DoubleClick was intensely criticized for the way it handled users' personal information during the dot-com boom.
"This is bringing together two very large advertising networks. To the extent that information is being centralized raises concerns that it could become a target" for hackers or overzealous government investigators, said Kurt Opsahl, senior staff attorney at the Electronic Frontier Foundation, a legal advocacy group. "Google said it has no plans to integrate the two services...but that doesn't mean that later, you might not develop those plans."
During the dot-com bubble, DoubleClick was to online advertising what Google is to Web search today. The company dominated the field so much that when it bought offline direct marketer Abacus and eventually began combining data on customers' real-world buying habits with their online behaviors, consumer privacy advocates sounded warning bells.
The FTC stepped in, and DoubleClick eventually backed away from the consumer media business and from targeting ads based on people's behavior.
Part of DoubleClick's retreat could be attributed to increased competition: Google and Yahoo became advertising powerhouses and made DoubleClick's business not as lucrative as it once was.
The prize: the display ad market
For Google, the DoubleClick deal is about breaking open the display-advertising market on the Web in the way it did with search marketing, media executives say.
By turning search advertising into an opportunity for anyone with a credit card and Web page, Google has attracted more than a million advertisers for its search ad marketplace, according to one advertising executive. But display advertising on the Web is still dominated by about 1,000 of the largest marketers.
With DoubleClick, Google could try to democratize display and rich-media ads the same way as it did with search, expanding the number of advertisers in the mix. In turn, it could boost demand for ad-serving technology that DoubleClick sells.
Media executives estimate that DoubleClick reaches between 80 percent and 85 percent of the Web population, given that such a high percentage of publishers and advertisers use its back-end ad-serving technology. (Its customers include Time Warner's AOL and Viacom's MTV Networks.)
Although DoubleClick's technology delivers the ads, the company does not collect personal information about Web surfers, nor does it target ads based on personal preferences, according to the company. Rather, it says its customers--the publishers and advertisers--own data on consumers.
DoubleClick doesn't need to collect personal information in order to target ads, privacy advocates say. With the placement of tracking cookies on individual computers, the company has access to a given computer's Internet Protocol address, as well as a record of sites it has visited.
"The question for DoubleClick is not whether they own the data but whether they store it," Opsahl said. "They have a storehouse of information that could be later accessed by a third party."
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