Editor's Note

past issue

I wanted to bring this to your attention.

Digital Big Brother Poses Threat to Consumer Privacy

Web posted July 26, 1999 by SF Gate reporter Deborah Solomon, San Francisco Chronicle Staff Writer.

It's 2001 and you're surfing the Net, looking for information on breast cancer to help your mom, who's recently found a lump. You buy a book, check out some Web sites, even go to a chat room on the subject. A few days later, your new employer has some bad news: Your health coverage has been denied because of a "pre-existing condition'' -- breast cancer.

The health plan came to that erroneous conclusion after buying information about your habits from a marketing firm, which has been tracking your every move.

If George Orwell thought 1984 was going to be bad, he'd freak at what's coming in the next century.

Soon, what we watch, what we read, even what we keep in our refrigerators, may be accessible to someone other than ourselves.

That's because companies are working on ways to network our homes --linking every appliance together and connecting them all to the Internet. High-tech companies want to connect our TVs with our PCs, our refrigerators with the Internet and our cell phones with our ovens.

But the futuristic ideas gaining steam in Silicon Valley worry privacy advocates, who fear all this connectivity poses major security risks for consumers.

While privacy on the Internet has long been a concern, consumer advocates say the sheer number of devices that will soon be hooked to the Net and the data about consumers that will become available to companies are dangerous.

Most of the concern centers around the loss of control consumers experience once they enter cyberspace. If everything is linked to the Net, privacy advocates say, consumers won't be able to avoid leaving records of their personal information and won't be able to control how companies use that data.

Consumers already leave digital footprints just by casually surfing the Internet. A file called a "cookie'' stores information about you each time you visit a Web site.

But tracking our movements will get easier for companies as more elements of our daily lives become connected to the Net.

"Once people start to observe all of your habits, particularly your reading and viewing habits, which make up a lot of our lives, they make assumptions about you and those assumptions are often wrong,'' said Tara Lemmey, president of the Electronic Frontier Foundation in San Francisco. "Privacy is about your identity. It's something you own and other people don't. No one should have access to your personal information but you.''

In the networked world of the future, however, information about consumers will flow from TV set-top boxes and various appliances to huge databases that can track customer habits. Other companies are compiling detailed lists of online spending habits and plan to sell that information to marketers.

One new technology that has privacy advocates concerned is interactive television, which is rich with consumer data. People will soon use set-top boxes to watch digital TV, surf the Net and shop online. These boxes, which are actually tiny computers, will record data, leaving a trail map of where you've been, what you've watched and what you've bought.

With this information, companies can do targeted marketing and tailor advertisements to your tastes. For example, if you watch the Travel Channel frequently, you might see a lot of advertisements for trips and airlines the next time you surf the Web. If you buy gourmet food online, you might start seeing TV ads for cooking schools and caterers.

"Set-top boxes are processors and so they can pick up and track viewing habits,'' said Gary Arlen, a multimedia expert with Arlen Communications in Bethesda, Md. "It's a little like Big Brother, but integrating Web content, including advertising, with television programming is part of the vision of what interactive TV will be.''

Companies such as Redwood City's ExciteAtHome, which provides Internet service over cable TV lines, plan to use

some data from set-top boxes for targeted marketing.

While targeted ads may not seem that big a deal, privacy groups say they're still intrusive.

"People don't want companies collecting personal, identifiable information about them,'' said Marc Rotenberg, executive director of the Electronic Privacy Information Center in Washington, D.C.

He said a person who buys a book on breast cancer or watches a documentary about alcoholism probably doesn't want that information made public.

"Sometimes people are researching issues like breast cancer, alcoholism or depression and it's not necessarily the case that they want everyone to know that,'' Rotenberg said.

Some companies are trying to keep the data they collect private but face challenges in a world where information flows so easily.

TiVo, a Sunnyvale startup, makes a kind of video recorder that builds a database of what the TV is tuned to. This enables TiVo to track your viewing habits so the device can "learn'' your favorite programs and automatically tape them for you. The company recently put in place a strict privacy policy that forbids releasing individual information on what a customer watches.

"We respect people's privacy and we wanted to be proactive in telling people, `We care about you as viewers,' '' said Lisa Varni, director of marketing for TiVo.

However, the device will still monitor what customers watch, and the company said it may sell that information in an aggregate form -- such as for an entire ZIP code or region.

While no individual information would be sold, advertisers may eventually get their hands on that data anyway. That's because TiVo will soon allow customers to buy products online. Once a consumer decides to make a purchase over the TV, TiVo is no longer responsible for information about that customer. So if you buy a cell phone in response to an interactive ad, the manufacturer is not legally bound to keep that information private.

But it's not just our Internet and TV habits that could be tracked in the future.

High-tech companies have talked about building Internet-based appliances like refrigerators that monitor food levels and communicate with the Web site of a major grocer. When you're running low on eggs and milk, the refrigerator would contact the grocer and order replacements.

But that information -- how often you go through items like beer and meat -- could be sold to other companies that want to sell you products or monitor your lifestyle. If you eat a lot of eggs and steak, you could start seeing ads for cholesterol tests or, in a worst-case scenario, your health care provider could increase your premiums in anticipation of a heart attack.

Marketers are also compiling huge databases of online spending habits. Earlier this year, Geocities, a "community'' site where users could set up their own home pages, got into trouble for secretly selling personal information about users -- such as income and occupation -- to marketers. But other companies have similar plans.

A recent example is DoubleClick, an online advertising company which bought Abacus Direct, a marketing research company. Together, the two companies plan to build an online database with specific customer information, such as spending habits.

DoubleClick sells banner advertising space on a network of more than 1,500 Web sites. When a customer shops at a site in DoubleClick's network, that information will be coupled with Abacus's database, which tracks what customers have bought in the past.

While DoubleClick has no plans to collect any personal data itself, information will flow between the Web sites in its network and Abacus' 1,100 merchandise catalog companies. Privacy advocates have opposed the deal and filed a complaint with the Federal Trade Commission, saying the merger is invasive because it uses personal information without the consumer's consent.

"There's a really fine line between good targeting and stalking,'' said Lemmey. She added that there's very little to prevent all this private information from falling into the wrong hands.

"If that much information about you is in one place and you're not in control of it, it doesn't take a lot for others to get access to it,'' she said. "That can lead to things like redlining.'' For example, a person who accesses information about personal bankruptcy could be denied a loan by a banker who subscribes to a database that tracks people's financial actions on the Web.

Or just plain old embarrassing situations could arise. For example, if a man were to watch the Playboy Channel one night, a banner ad for a pornographic Web site could possibly appear on his computer the next day when his daughter sits down to do her homework. Or a wife who buys a book on divorce for a friend may have some explaining to do when her husband starts seeing ads for divorce lawyers on their PC and in the mail.

"The freedom to think freely is really what makes society move forward. Losing your privacy will curtail that freedom,'' Lemmey said.

But others say the loss of privacy is just the price people must pay for living in a digital age.

"In general, I'm sort of resigned to the loss of privacy that the digital age is forcing upon us,'' said Arlen, the multimedia expert. "The Internet is both more anonymous in that you're just a number and it's also less private.''

Yet people don't have to opt out of the digital society to remain private. There's software available that can keep you anonymous when surfing the Web and privacy advocates say people can make sure information about them is kept confidential by asking companies about their privacy policies.

And that anonymity may come in handy in the future. Some companies are planning to gather data from the most unlikely places.

One Japanese company, Matsushita, plans to market a "smart'' toilet. Sensors in the bowl will analyze what you deposit and send information about it to health care providers.

SOMEONE'S WATCHING: HOW MARKETERS MAT STALK YOU AT HOME

As everyday appliances get `'smarter" and more able to respond to your needs, they also may be collecting more information about your personal habits and feeding it to marketers.

COMPUTERS

You can leave a trail in cyberspace showing what information you're interested in, including health and finance. For example, an insurance company could see that you're researching cancer and refuse you coverage; or a potential mortgage broker could see that you just dropped a bundle in the stock market and turn you down.

HOME APPLIANCES

"Smart'' thermostats that adjust the temperature to suit you and refrigerators that keep track of what you need to buy could also compile data on how much energy you consume and how much beer you drink.

TV HABITS

With interactive TV, advertisers will know what you buy in reponse to commercials and what you like to watch.

PERSONAL HABITS PROFILE

Once marketers have data about you, they could compile it into a personal profile.   For example,

George Williams, age 38
Divorced
Income range: $80,000 to $110,000
Recently refinanced his home through online banker
Does some day trading in his spare time, with particular interest in biotech stocks
Hobbies include boats, motorcycles, woodworking
Watches news, history, cartoon shows. Sometimes watches Martha Stewart and Lifetime channel
Trying unsuccessfully to quit smoking
Has medical problems he'd rather not discuss
Eats diet high in fat, but is concerned about weight
Likes to keep house warm, even when he's out

YOUR TV KNOWS YOU BETTER THAN YOU THINK.

George Williams, you've tried to quit smoking before. With our new product, now you really can quit.