Yahoo's SmartAd Raises Privacy Concerns

July 4, 2007 — -- This week, Yahoo unveiled a new advertising program that allows its clients to tailor ads to individual Web surfers based on their own unique search history, geography, and demographic information including age, sex, and occupation.

Yahoo hopes that SmartAds, announced Monday, will give the once high-flying Internet company a leg up on its dominant competitor Google by providing firms with unprecedented access to the habits and hobbies of Web surfers.

With Yahoo's SmartAds platform, if you list San Francisco as your location in Yahoo weather and run a Yahoo search for Las Vegas, Yahoo will automatically generate an ad displaying real-time rates for flights from San Francisco to Las Vegas.

Are you from Chicago with a search history that indicates an interest in SUVs? Yahoo has an ad for you, too -- perhaps one with prices and inventory levels at the dealership just down the road.

But as companies like Yahoo compile and save increasingly detailed information about people who visit their sites, do these efforts constitute a threat to your Internet privacy? And even if they do, should you be concerned if they let you save time and money by bringing you the products that you want when you want them?

According to some industry observers and privacy advocates, including Paul Stephens of the Privacy Rights Clearinghouse, the answer to both questions is yes.

"I absolutely believe it is a threat to privacy," Stephens told ABC News. "[SmartAds] is disconcerting because it's compiling all sorts of information about you, things that you may have done a year ago on a Yahoo site, that you may have completely forgotten about."

By targeting ads not only to a particular search term, as Google's AdSense program does, but also incorporating a user's history and profile information with Yahoo, SmartAds goes a dangerous step further than its competition in creating that complete user profile, Stephens said.

But according to Solveig Singleton, a senior adjunct fellow at the Progress and Freedom Foundation, a market-based tech policy think tank, these privacy concerns are overblown. So long as companies like Yahoo and Google continue to keep financial records private, internet users can only benefit from the advance of technology.