Amazon Unit Being Probed by FTC, Sued
A subsidiary of online retail giant Amazon.com Inc. is under scrutiny by the Federal Trade Commission and is the subject of two lawsuits over its use of private customer data.
In a document filed with the Securities and Exchange Commission on Monday, Amazon.com said the FTC was engaged in an “informal” investigation of Alexa Internet and its software, which tracks where users go on the World Wide Web in order to provide related Web links and other data.
The FTC would not comment on its investigation.
The two lawsuits mentioned in the SEC filing allege that Alexa’s software, which is downloaded and installed on Web browsers such as Netscape Navigator and Microsoft Internet Explorer, intercepts personal data and sends that information to third parties, including Amazon.com.
“We are cooperating completely with the FTC on an informal, voluntary basis,” Alexa spokeswoman Dia Cheney said. “As for the lawsuits, we believe the claims have no merit.”
Computer security consultant Richard Smith, who found the possible privacy problems in Alexa’s software, said the privacy concern is in the way Alexa tracks Web pages to provide related links. The system records the entire address of each Web page. On some Web sites, those addresses could contain customer data.
“Some [Web addresses] may contain personal information such as mailing addresses or customer account numbers,” Smith said. “It’s conceivable that someone like Alexa could tie it all together with your surfing patterns and create a profile.”
The lawsuits allege that San Francisco-based Alexa is doing that: combining information gleaned from Web addresses with Amazon.com’s customer accounts. Both companies deny the charges. Alexa would not identify where the suits were filed.
Cheney said Web usage patterns and customers’ data are stored in separate databases and are not linked.
Both Amazon and Alexa said Tuesday that the data that Alexa gathers remain on Alexa’s databases and are not given to Amazon.
“This is not transactional information,” Amazon spokesman Bill Curry said. “This is a service that Alexa has on its product. It doesn’t funnel into us.”
Amazon shares rose $8.13 to close at $83.13 on Nasdaq.
