Senator Franken targets indoor-positioning firm Euclid's privacy practices

Indoor-positioning technologies that can be used by retail establishments and other businesses to track and market to consumers are attracting growing scrutiny, as evidenced by a letter sent from Sen. Al Franken (D-Minn.) to Euclid, which markets Wi-Fi-generated shopper analytics.

According to Euclid, its sensors collect information from nearby phones emitting Wi-Fi signals. That data includes each phone's "unique MAC address, manufacturer code (Apple, Samsung, etc.), signal strength, and, if the device is currently connected to a specific Wi-Fi network, the name of that Wi-Fi network." Euclid anonymizes the data and analyzes it, providing its clients and technology trial partners--including retail giant Nordstrom--with analytics reports they can use to improve their operations.

While the stripping out of identifiable information might be comforting to some, one sticking point with Euclid's approach is that it requires smartphone users to opt out of its service, which they may not even know exists. The company's website includes a form where people can enter their device's MAC address "to opt out of Euclid services and remove your phone's identifier from our databases."

That opt-out, rather than opt-in, requirement is what appears to have raised the ire of Franken, who chairs a Senate subcommittee on privacy, technology and the law.

"It's one thing to track someone's shopping habits through a loyalty card or credit card purchase; folks understand that their information may be collected," he said. "It's another thing entirely to track consumers' movements without their permission as they shop, especially when someone doesn't buy anything or even enter a store. People have a fundamental right to privacy, and I think neglecting to ask consumers for their permission to track them violates that right."

In March, Franken sent Euclid a letter asking 16 detailed questions about its privacy practices and requested an answer by April 1. The Wall Street Journal wrote about the letter last week, noting Euclid's co-founders and marketing team declined to speak with the publication regarding the company's technology, business practices or response to Franken. Board member Bruce Dunlevie, general partner at Euclid investor Benchmark Capital, was unavailable for comment, and other investors did not reply to the Journal's queries about Euclid.

Euclid, a Palo Alto, Calif.-based startup, closed a $17.3M million financing in February in a round led by Benchmark Capital with participation from NEA, Harrison Metal and Novel TMT Ventures. The company has raised $23.6 million in total outside funding.

Hyper-local marketing and other services based on various methods of indoor positioning are becoming a hot market and attracting notable investments.

IndoorAtlas, a Finland-based startup that provides indoor location and positioning technology based on magnetic anomalies, recently snagged a seed-round investment of about $640,000 from Dallas-based Mobility Ventures, while Apple (NASDAQ:AAPL) forked over a reported $20 million to acquire WifiSLAM, which makes indoor positioning apps that are based on Wi-Fi signals).

Apple archrival Google (NASDAQ:GOOG) added indoor mapping tools in late 2011 to the Google Maps app for mobile.

In August 2012, 22 companies including Nokia (NYSE:NOK), Qualcomm (NASDAQ:QCOM), Samsung and Sony formed the In-Location Alliance.

For more:
- see this Wall Street Journal article
- see this Sen. Franken letter

Related articles:
IndoorAtlas magnetically attracts $640,000 seed round
Apple pays $20M for indoor-location firm WifiSLAM
Google Maps for iOS eclipses 10 million downloads in first two days
Nokia, Qualcomm, Samsung spearhead indoor navigation alliance
Nokia adds location-based Groupon deals to Lumia smartphones
Google Maps for Android adds museum guide features

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