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Apple Sued for Sending IPhone, Ipad User Data to Advertisers

Lawsuit Comes Amid Increased Scrutiny Over Mobile Privacy

By Published on . 1

NEW YORK (AdAge.com) -- Apple and top app developers are facing a lawsuit alleging they've been illegally shuttling iPhone and iPad users' personal data to advertisers without consent. (Bloomberg Businessweek first reported the filing.)

The lawsuit seeks class action status against Apple and app developers Pandora, Backflip Studios, Weather Channel and Dictionary.com, which were also named as defendants, for alleged privacy and computer fraud violations. Apple and the other defendants are accused of transmitting personal, identifying information, including app use, to third-party ad networks without user consent.

"Some apps are also selling additional information to ad networks, including users' location, gender, income, ethnicity, sexual orientation and political views," states the complaint.

Apple did not respond to requests for comment, while the Weather Channel and Pandora declined comment.

"It's a pretty common type of suit that's very much in vogue now because privacy is a hot issue," said Brad Seiling, partner at Manatt, Phelps & Phillips and co-chair of the firm's class action group. "The challenge these suits face is that very often it is clearly and specifically disclosed what's taking place."

The complaint was filed last week in Northern California federal court on behalf of Jonathan Lalo, a Los Angeles County resident, and will pursue class action for the "millions" of U.S. residents that have downloaded the defendants' apps on their iPhones or iPads since December 2008. Three of the four apps cited in the complaint are in the top 50, ranked by downloads, in the App Store. As the complaint stands now, damages total a mere $5,000.

(Another complaint making similar claims against Apple and several app developers, including Pandora, Backflip and Weather Channel, was filed on the same day, Dec. 23, in the same court. "The two cases are independently filed," said David Parisi, an attorney for one of the plaintiffs in the second complaint, Dustin Freeman. "After counsel learned of each other, we are speaking to each other about the cases.")

While Apple discloses that personal information may be made available for advertising purposes in its App Store terms and disclosures, the complaint claims that the defendant's actions exceed the scope of consent given at the time of download.

App Store terms, which must be accepted when apps are downloaded, read: "You may be asked to provide your personal information anytime you are in contact with Apple or an Apple affiliated company. Apple and its affiliates may share this personal information with each other and use it consistent with this Privacy Policy. They may also combine it with other information to provide and improve our products, services, content, and advertising."

It also raises the question of who exactly in the app ecosytem is responsible for user data and related violations. Outside of Apple's iAd mobile ad network, app developers have direct relationships with third-party networks like Google's Admob or Millennial Media, though the complaint says Apple sets the "unique device identifier" that ad networks use to track users.

"The liability of platform owners for the apps on their machines is really unclear," said Tim Wu, professor of law at Columbia University and author of "Who Controls the Internet?" "This question is a lot like the internet question of the 1990s. No one ever said Microsoft was on the hook for viruses."

The suit is yet another sign that privacy concerns over online and mobile tracking are reaching fever pitch. Earlier this month, trade organization Mobile Marketing Association set out to create mobile privacy guidelines to determine acceptable and unacceptable practices.

"Frankly, not everybody in the industry does it right," said Mr. Seiling. "There are some instances out there when disclosures haven't been good or haven't been clear."

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Contributing: Irina Slutsky

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