Law & Disorder / Civilization & Discontents

NebuAd loses CEO, business model in wake of tracking furor

With the loss of its CEO and the end of most of its ISP trials, web tracking …

Congressional inquiries can be bad for business, as web tracking company NebuAd has learned the hard way. After a summer of Congressional hearings and nastygrams, NebuAd's ISP trials have withered, its CEO has bolted, and a distinctly autumnal feeling is in the air. Then, today, the Washington Post dropped the news that NebuAd was scaling back its web tracking plans altogether in order to "broaden its focus" into more traditional advertising segments.

NebuAd's approach was controversial from the start. The company used deep packet inspection appliances to watch web traffic and sort users into various categories; advertisements could then be delivered to web surfers who had a habit, for instance, of frequenting travel sites during that month.

Such approaches required access to raw ISP data, which meant that NebuAd had to find partners. It managed to do so, mostly with smaller ISPs, but also with larger players like Embarq and Charter. The reward for this cooperation is cash; NebuAd turns a portion of its ad revenues over to participating ISPs in return for access to their sensitive user data.

But what about the users? Notices were sent saying that people could "opt out" if they chose, but Congress had questions about that approach—big questions, such as: is it even legal to presumptively opt people in to what could be described as "wire tapping?".

NebuAd CEO Robert Dykes dutifully did his best to stave off Congress, but repeated hearings and hostile letters of inquiry from Congressional committees were enough to convince most ISPs to pull the plug on their NebuAd trials. Embarq and Charter did so quickly, and a recent Associated Press piece canvases ISP opinion. Basically, with the sharks in the water, no one wants to stick so much as a toe in at the moment until the dorsal fins disappear and the all-clear sounds.

With Congressional scrutiny threatening to make the business unworkable, Dykes this week left for Verifone (see the announcement), where he will take the Chief Financial Officer position.

As for NebuAd, it hasn't updated its press clippings page since May—about the time that the shark was rolled out in preparation for some jumping. The company has a new CEO who hopes to refocus NebuAd as a more traditional ad company, though it's not yet clear how effective the company's ad targeting tech is without access to ISP data.

Meanwhile, across the pond, a company called Phorm has been having better luck with the same scheme, and its trials appear to be moving rapidly ahead. But it, too, faces regulatory dangers, as the EU last month launched an inquiry of its own into the legality of the entire approach.

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