Yahoo! named in FTC privacy investigation
Shareholders warned to lower expectations
Internet giant Yahoo! has become the target of a Federal Trade Commission (FTC) investigation into whether it disclosed customer data to third parties in violation of federal regulations, the Associated Press reports. The company has been ordered to turn over documents investigators hope will enable them to determine if it violated FTC consumer protection regulations concerning the use of personal data. Yahoo! revealed the action in its annual report filed with the US Securities and Exchange Commission (SEC) on Thursday. The investigation may also include Yahoo!'s subsidiary GeoCities, which hosts Web sites for the technologically challenged. GeoCities reached a settlement with the FTC in 1998 in which it agreed to change the way it collects and distributes information about its customers, the wire service says. In its SEC filing, Yahoo! warned shareholders that any negative findings by the FTC could result in actions "which could potentially have an adverse effect on our business, results of operations and financial condition." The company said it is prepared to defend its privacy practices. This is only the latest in a string of controversies questioning whether Internet companies can implement adequate privacy policies without regulatory oversight. Earlier this year, Web advertising outfit DoubleClick elicited outrage among privacy advocates after announcing plans to combine non-identifiable aggregate data with identifiable personal data that it collects from consumers. The company scrapped the plan in response to blistering public criticism. The Clinton administration has urged US Web companies to regulate themselves in order to avoid government intervention. But market forces being what they are, the companies will naturally put that off until the last possible minute -- say, just about the time when some really horrible bill will have reached Conference Committee on the Hill -- and continue getting away with as much abuse as they possibly can in the mean time. They just have to hope that they'll pull the rabbit out of the hat in time. ®
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