Beleaguered DoubleClick Appoints Privacy Board

In an attempt to rebuild its tarnished image, DoubleClick, Inc. appointed an independent panel Wednesday that will be responsible for reviewing the controversial Internet advertising company's new products and services for potential privacy violations.

The company's seven-member "privacy advisory board" includes consumer advocates, security experts and authorities in the area of online privacy.

Among those joining the effort are Lori Fena, chairman of TRUSTe, a nonprofit company that conducts privacy audits of Web sites; Daniel J. Weitzner, technology and society domain leader of the World Wide Web Consortium, an Internet Standards organization; Elizabeth Lascoutx, director of the children's advisory review unit at the Council of Better Business Bureaus; Robert Litan, vice president and director of economic studies at the Brookings Institution; David Stazer, vice president of product development at PlanetOut Corp., a Web company serving gays and lesbians; Harriet P. Pearson, director of public affairs at IBM Corp. (NYSE: IBM); and Stewart Baker, an attorney specializing in privacy and encryption issues at Steptoe & Johnson, a Washington law firm.

While some analysts believe that DoubleClick's latest move is a step in the right direction, others dismiss it as little more than window dressing. However, Fena said in published reports that she is optimistic that DoubleClick executives will listen to the new board's advice.

Robert Abrams, a former New York State attorney general, will serve as chairman of the new privacy advisory board.

Protests, Investigations and Lawsuits

If the new board makes headway after it convenes on June 2nd, it could be the first step in reversing some of DoubleClick's recent self-inflicted damage.

Along with other Net advertisers, DoubleClick has long engaged in the practice of using "cookies" in order to target ads to user interests. Though some privacy advocates have expressed unease over what they view as spying, they have grudgingly tolerated cookies because the data collected is not linked to user identities.

However, that atmosphere of tolerance evaporated in June 1999, when DoubleClick announced a plan to acquire Abacus Direct Corp. in a $1.7 billion (US$) deal , giving the company access to an extensive database and the means to connect shopping habits with identities and other personal information gathered about individual online consumers. The move spurred an outcry from privacy advocates, and a flurry of legal action against DoubleClick.

In January, a lawsuit was filed on behalf of Harriet Judnick and the citizens of California claiming that New York-based DoubleClick was tracking Internet users and obtaining personal and financial information such as names, ages, addresses, and shopping patterns, without their knowledge.

FTC Inquiry

DoubleClick's troubles then snowballed when the Electronic Privacy Information Center (EPIC) filed a complaint with the Federal Trade Commission (FTC) alleging that DoubleClick engaged in "unfair and deceptive trade practices." In mid-February, DoubleClick announced that the FTC had launched an inquiry into its methods of gathering and using information about online consumers.

DoubleClick was also accused of the equivalent of cyber-spying by Jennifer M. Granholm, the Attorney General of Michigan, who said that the company's opt-out policy was misleading and a violation of the state's Consumer Protection Act.

Michigan also advised DoubleClick to stop placing cookies on its consumers' computers to track their Net surfing unless the company received direct permission. The state said that DoubleClick would have 10 days to discontinue the practice or be sued.

The New York State Attorney General's office is also investigating DoubleClick's advertising practices.

Backlash

DoubleClick has since tried desperately to quiet its critics by postponing the merger of its databases. After rolling out a five-point privacy awareness campaign, the company began to recruit advisors such as Jules Polonetsky, a former New York consumer-affairs commissioner, to fill its newly created role of chief privacy officer.

The company, which reported a first-quarter loss of $13.2 million (US$) on revenues of $110 million, is fighting a legal battle on another front as well. Online advertising rival 24/7 Media filed a lawsuit in federal court in New York earlier this month, accusing DoubleClick of patent infringement.

24/7 alleges that DoubleClick infringed on its ad-serving system, which provides targeted ads to consumers based on usage patterns.