Congress grills Net companies on online privacy

WASHINGTON -- Executives from major Internet players — Microsoft, Google and Facebook — are due for a grilling about online privacy in a Senate committee Wednesday, but the company likely to get the most scrutiny is a small Silicon Valley start-up called NebuAd.

NebuAd has drawn fierce criticism from privacy advocates in recent weeks for working with Internet service providers to track the online behavior of their customers and then serve up targeted banner ads based on that behavior.

According to Ari Schwartz, vice president of the Center for Democracy & Technology, a civil liberties group, NebuAd's business model raises many of the same concerns as an earlier generation of "adware" companies. Those companies developed software programs that — when downloaded to a computer — could track where a user went on the Internet and mine that information to deliver customized online ads. Several NebuAd executives in fact were once employed by Gator Corp., an adware company that later renamed itself Claria Corp.

Privacy activists say adware companies duped many Web surfers into downloading their software programs by bundling them with free screen savers, online games and other Internet applications. But NebuAd has a new twist: It works directly with Internet service providers to scan their customers' Web surfing habits and deliver ads presumed to be of interest to them.

By injecting its monitoring in between consumers and the websites they visit, NebuAd's technology could violate a 1986 federal wiretapping law that requires at least one party to a communication to consent to a wiretap, according to an analysis released Tuesday by the Center for Democracy & Technology. British technologists have leveled similar criticisms against a NebuAd-like system being prepared in that country by Phorm Inc.

"This is analogous to AT&T listening to your phone calls all day in order to figure out what to sell you in the middle of dinner," said Robert Topolski, a technology consultant to Public Knowledge and Free Press, two other public interest groups that have raised concerns about NebuAd.