The use of web bugs at HomeConnection As Matthew Scott, president of HomeConnection, sat in his office waiting for several members of his executive team to arrive, he grew more worrisome about a story featuring his company in the morning paper

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Privacy Pressures: The use of web bugs at HomeConnection As Matthew Scott, president of HomeConnection, sat in his office waiting for several members of his executive team to arrive, he grew more worrisome about a story featuring his company in the morning paper. His impulse was to fight back and go on the defensive, but Scott knew that he had to be careful. However, he did not accept the articles implicit conclusion that HomeConnection had no regard for the privacy rights of its customers, and he was anxious to hear what the matter. HomeConnection was an Internet Service Provider (ISP) with several million customers, primarily clustered in the Midwest. An ISP links people and businesses to the internet, usually for a monthly fee. HomeConnection was much smaller than the industry leader, AOL, but it was seen as a formidable player in this industry. Thanks to Scott’s management, the company had recorded increasing profits for the past 3 years, 1999 thru 2002. One feature that attracted customers was the opportunity to create their personal Web page. HomeConnection made this process easy and convenient. In the past year HomeConnection had devised an innovative promotion to help increase its subscriber base. The company encouraged its users with their own personal web pages to carry an ad for HomeConnection. The ad would offer new subscribers a heavily discounted rate for the first year of membership. In addition, as an incentive to display the ad on their personal pages, the company agreed to pay its users $25 for any new member who signed up for a subscription by clicking on the ad. The response to the promotion was stronger than expected, and HomeConnection’s membership had risen by over 6.5 percent since the program’s inception 8 months ago. Scott was quite enthused about the results, and he did not anticipate the one aspect of the program would attract some negative attention. In consultation with his marketing manager, Scott had authorized the use of Web bugs so that when users placed the ad on their Web pages they would also get a Web bug. A Web bug is embedded as a minuscule and invisible picture on the screen and it can track everything one does on a particular website. Web bugs also called “web beacons” are usually deployed to count visitors to a website or to gather cumulative data about visitors to those sites without tracking any personal details. In this case the web bug transmitted information to a major online ad agency, DoubleDealer. DoubleDealer would collect data about those who visited these web pages, which ads they clicked on, and so forth. The newspaper report cited HomeConnection as well as other ISP’s and e-commerce sites for using this protocol without the permission of their customers. They quoted a well known privacy expert: “Its extremely disturbing that these companies are using technology to gather information in such a manner; I don’t see how it can be morallyjustified.” The article had clearly resonated with some of HomeConnection’s users, and the switchboard had been busy most of the afternoon with calls from itate customers. Some wanted to cancel their subscription. Scott felt that the company had done nothing wrong but was a victim of a pervasive paranoia about privacy. HomeConnection was not using the bugs for any untoward purposes-its purpose was to track the results of the advertising promotion, that is, how many people were clicking on these ads. Also, Scott himself had modified the company’s privacy policy to indicate that web bugs might be used sometimes. (However, there was no indication that web bugs would be placed on the personal web pages of its user base.) As several of his managers made their way into the conference room adjoining his office, Scott made last check with customer service. By now it was late in the day and the volume of calls and emails was dying down. It was now up to Scott to determine a response-did the company face a serious problem or was this just a tempest in a teapot?
Questions 1. Has HomeConnection’s use of the web bug violated the privacy of those who agreed to display the ad on their personal computers? Has the privacy of those who visit the site and click on the ad been violated? 2. Should those who display the ad on their personal computers have the right to refuse to have web bugs attached? In other words, should they be allowed to have the right to opt-out of this arrangement? 3. Suppose a person who displays the ad agrees to the web bug. Should that person be required to place a statement on his or her personal web site indicating that persons clicking on the ad may receive further advertisements from a number of sources?



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