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FIPR Paper indicates it is illegal to profile web users with Adware

December 14, 2008

I still think Google is getting away with large scale profiling that is slipping under the regulatory radar, an would like to hear more about it (the process of removing your search history, for example, is deliberately far from transparent) but here’s a definitive paper on the legal status of adware such as Phorm’s Webwise from Nicholas Boem and Joel Harrison:

“Half the money I spend on advertising is wasted. The trouble is, I don’t know which half.” Can targeted online advertising reduce the waste identified in this pithy and much-quoted observation? Phorm, Inc’s Webwise system aims to do so by profiling web users on the basis of their online browsing, and by then selecting the advertisements they see on the basis of their individual profiles. Three of Britain’s largest Internet Service Providers (ISPs), BT, Talk Talk and Virgin Media, are reported to be considering whether to deploy the Webwise system, with BT known already to have conducted technical trials of the system on a number of its customers.

Dr Richard Clayton, of the Cambridge University Computer Laboratory, has published a detailed description of the Webwise system on the basis of information supplied by Phorm. That description repays careful reading, but for present purposes the following summary is sufficient. When an ISP runs the Webwise system, it makes a copy of certain of the web pages visited by those of its customers who it considers have consented to being included in the system. The ISP then carries out an analysis of each page. The fruit of that analysis is a list of up to ten of the most frequently used significant words, after disregarding words consisting only of digits, or containing an “@” symbol, or following a title such as “Mr” or “Mrs” – a sort of digest of the page. That digest is passed by the ISP to Phorm coupled with a pseudonym for the user (a UID), so that Phorm can build a profile for the user by matching the digest against a database of key words. Based on this analysis, the user (represented by the UID) is allocated to certain “channels” (travel, music, sports and so on). When the user later visits a website that is a member of Phorm’s Open Internet Exchange (OIX), the profile is used to select advertisements that match the channels to which the user is allocated.

This process raises a number of interesting legal issues. The Foundation for Information Policy Research has published an analysis of the criminal law and regulatory issues affecting ISPs who run the Webwise system. This article is directed instead to the legal position of the owners of intellectual property rights (IPR) in websites whose pages are used by ISPs in the course of profiling users. (The person who owns the IPR in a web page may or may not be the person who manages the website of which it forms part, but the distinction is immaterial for present purposes. In what follows the IPR owner is referred to for convenience as the site- owner; and references to ISPs are to those ISPs who run the Webwise system.)

For the full article, go to: http://www.fipr.org/0811SCLarticle.pdf