The DoubleClick Controversy|IT and Systems|Case Study|Case Studies

The DoubleClick Controversy

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Case Details:

Case Code : ITSY014
Case Length : 11 Pages
Period : 1995-2001
Pub Date : 2001
Teaching Note : Available
Organization :
Industry : Internet Commerce
Countries : USA

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"Every time you use the Internet, DoubleClick is placing a bar code on your back - a user I.D. - so that it can identify your interests, habits and preferences. The average consumer has no idea that their on-line movements are being spied upon; this amounts to little more than a secret, cyber wiretap."

- Jennifer M. Granholm, Attorney General, Michigan State, US,
in February 2000.

A Spate of Lawsuits

In January 2000, a suit was filed against the world's largest Internet advertising company (DoubleClick) in the California Superior Court.

The media company providing digital marketing and Internet advertising technology and services, was accused of using computer tracking technology to identify Internet users and collect personal information without their consent, while they browsed the World Wide Web.

DoubleClick had allegedly 'represented to the general public that it was not collecting personal and identifying information and that it gives privacy interests of Internet users the utmost importance.'

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The following month, the US state of Michigan too served a notice of intended legal action against the company over the issue of improper data collection. This was accompanied by the US Federal Trade Commission (FTC) launching a review of some websites accused of inappropriate sharing of personal information of their visitors with third parties. DoubleClick was named in this probe as a third-party. These accusations were accompanied by various privacy and civil liberty groups asking the US government to toughen online privacy norms to make it harder for companies to disseminate user records. A popular healthcare website, was one of the websites reported to be sending user details to DoubleClick.

DrKoop eventually severed its business relationship with DoubleClick over the issue. Search engine, another partner of DoubleClick, decided to limit the release of user information to the company. Kozmo, a company involved in-home delivery of video/food etc. also decided to end its relationship with DoubleClick. The number of suits against the company soon reached 20 - 13 in Federal courts, five in California and one each in Texas and Illinois state courts. The stock price declined by 86% from $ 107.63 on February 1, 1999 to $ 15.25 on January 21, 2001(Refer Exhibit I). Alarmed by the above developments, DoubleClick was forced to rethink its controversial data collection practices.

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