Verizon's AOL deal raises 'extremely substantial and urgent privacy concerns'

Verizon Communications' (NYSE: VZ) $4.4 billion acquisition of AOL, which a top Verizon executive has said is mostly about AOL's advertising technology, is raising new concerns that customers' privacy will be exploited in Verizon's push to create more targeted ads.

As the National Journal notes, the worry among privacy advocates is that Verizon will combine AOL's advertising technology with its own customer data to create hyper-targeted ads, particularly for its over-the-top video service it is launching this summer. Verizon has in the past run afoul of privacy watchdogs over its Precision Market Insights division, and its use of a so-called "super cookie" in tracking mobile browsing.

"For us, the principal interest was around the ad-tech platform that [AOL CEO] Tim Armstrong and his team have done a really terrific job building," John Stratton, president of operations for Verizon's wireless and wireline divisions, said at a Jefferies investor conference yesterday. "We really like the technology a lot and we think of it as a key enabler for us as we begin to generate revenue and value above the network layer. So we've talked a lot about our over-the-top video ambitions and this is for us a very important cornerstone enabler as part of that broader strategy."

Analysts have said that Verizon is likely going to leverage AOL's ad-tech to track engagement and target ads across devices on its network, marrying AOL's technology with its own data on subscribers' locations and profiles.

"Whether or not the combination of a major online advertiser with the largest mobile-services provider raises substantial antitrust concerns, it raises extremely substantial and urgent privacy concerns," Harold Feld, the senior vice president of Public Knowledge, a consumer-advocacy group, told the National Journal. "Verizon has already shown an alarming tendency to harvest private information from subscribers to bolster its foray into online advertising."

"With this acquisition, Verizon appears to be tearing down the wall between telecommunications and personalized advertising," said Jonathan Mayer, a computer researcher at Stanford University, told the National Journal. "The FCC might have something to say about that."

However, according to the report, the FCC is not going to evaluate the deal because it does not involve a transfer of spectrum licenses. The deal will need to get approved by either the Federal Trade Commission or the Department of Justice.

Verizon declined to comment on the criticism, according to the National Journal.

Last fall the Electronic Frontier Foundation raised questions about the profiling technologies used by Verizon's Precision Market Insights division. The unit creates anonymous profiles of Verizon users, including its wireless users, which it sells to advertisers. The advertisers can use the data to create more targeted online advertisements. Verizon, for its part, has argued it does not share the data outside of the company, and the data is not tied to specific users.

In a related item, the FCC is investigating Verizon's "super cookie" program. The program inserted an undetectable and undeletable tracking ID--the "super cookie"--into its subscribers' mobile Internet devices to track browsing activities. Consumer advocates argued the program violated consumer privacy laws. As a result of the concerns, Verizon is letting customers totally opt out of the program that put the super cookie into their mobile browsers.

For more:
- see this National Journal article

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