April 26th, 2009

AT&T Queried on Targeting Ads

By Emily Steel
The Wall Street Journal

After criticizing Internet companies for gathering behavioral data on consumers for advertising, AT&T Inc. is coming under scrutiny itself for using such practices in its marketing.

Rep. Anna Eshoo (D., Calif.), a member of the House Subcommittee on Telecommunications and the Internet, sent AT&T Chief Executive Randall Stephenson a letter on Friday asking him to clarify the company’s stance on the issue. She requested details on whether AT&T advertises through a practice called behavioral targeting, in which a company tracks consumers’ online activities—such as the searches they perform and the Web sites they visit—in order to show them ads according to their likely interests.

AT&T acknowledges that as a marketer it buys such ads. The company contracts with online ad networks including Audience Science, a prominent behavioral-targeting firm. A consumer visiting an AT&T Web site might have an anonymous tracking “cookie” placed on his or her hard drive, for example, and then, when visiting another Web site in the ad network, be shown an ad from AT&T. Through this method, AT&T uses consumer information for advertising without first obtaining consent from consumers, who must opt out if they don’t want the information to be used for targeting purposes.

This is the practice deployed by most Internet and other media companies, such as Google Inc. and Yahoo Inc., which say the data they use to target ads are anonymous and can’t be traced to individual consumers. Google and Yahoo are among the companies based in Ms. Eshoo’s district.

AT&T advocated strict privacy standards during a hearing before the House subcommittee Thursday. Dorothy Attwood, chief privacy officer for AT&T, said that consumers should be given notice of what information is collected about them and how it is used and protected, and should have tools that let them determine whether their Web activities are being tracked. The company said it won’t use consumer information for online behavioral advertising unless it first obtains consent from the consumers involved.

AT&T says that as an Internet-service provider it doesn’t track its customers’ data across Web sites to create a profile for behavioral advertising or hire other firms to do so on its behalf. “Our relationship with this firm [Audience Science] is as an advertiser of AT&T products and services,” the company said in a statement.

Some members of Congress have said they think a statute is needed to regulate how companies collect, share and use data on consumers’ behavior in targeting online advertising. The subcommittee hearing was held to investigate privacy practices at cable and telecommunications companies, laying the groundwork for legislation that could restrict how they target online ads at consumers.

AT&T argues that the same scrutiny that occasioned its appearance before the House subcommittee as a telecom company should apply to the Internet companies. Most Internet companies and industry trade groups say that regulation would stifle the growth of digital advertising.

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