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Start-up's tracking software sets off privacy alarm

Predictive Networks releases a software product that can precisely track online behavior and then use the information to send targeted advertisements to individual Web surfers.

Predictive Networks today released a software product that can precisely track online behavior and then use the information to send targeted advertisements to individual Web surfers.

Predictive said Internet service provider IDT plans to use the software with a new free ISP, FreeAtLast.com.

FreeAtLast vice president Michael Packer said that people who sign up for the service will be required to install Predictive's software. Although members are required to submit their names to the service, Packer said the ISP will not connect people's names with the data collected by the company in accordance with its privacy policy.

"There will be no connection between user data and user behavior," he said.

Spurred by ad-supported Web sites, software companies continue to test the boundaries of data collection on the Net, despite heavy scrutiny by privacy watchdogs. Web portals and online retailers commonly ask people to divulge information in exchange for services, and perks and rewards are frequently enlisted to persuade consumers to part with personal information.

Predictive's new product underscores the voracious appetite of Web companies for detailed consumer information, regardless of consumers' fears of growing online surveillance.

"Web sites will pay quite a bit to introduce their Web site to a user who's never seen it before," said Devin Hosea, Predictive's founder. "We share the revenue that we produce with ISP partners."

Furthermore, Predictive has technology that can track people's keystrokes. This technology, if implemented, allows the company to serve advertisements based on information people enter into a search engine or registration page.

The company will not implement the technology unless it gets approval from an independent privacy board, Hosea said. A group headed by legal expert Harvey Silverglate is looking into the technology.

Nonetheless, the prospect of having people under surveillance makes some privacy advocates nervous. Evan Hendricks, editor of Washington-based newsletter Privacy Times, said surveillance is a big turn-off for consumers no matter what kinds of services are being offered.

"Surveillance is not a good business model in the Internet world," Hendricks said. "Most individuals will not agree to be put under surveillance unless there's an incredible incentive to do so."

Online privacy is a contentious issue that recently has caused consumer alarm. Earlier this year, online ad network DoubleClick came under fire when the company revealed a plan to track consumers' movements online and to attach that data to people's real names and addresses.

The plan became possible after DoubleClick sealed a $1.7 billion merger in November with Abacus Direct, a Broomfield, Colo.-based company that markets consumer-purchasing data to catalog firms.

Predictive's Hosea does not think his company's software product will come under similar scrutiny. He said Predictive will never attach an identity to a profile and will never sell its database of specific profiles to advertisers. Rather, advertisers buy targeted advertising space in bulk.

Furthermore, Hosea said that the company is trying to be less intrusive with its pop-up ads. Instead of popping up when a person is actively surfing the Web, the windows appear behind the active Web page or when the person is idle.

"We designed this system to be the privacy solution to what we see as a privacy dilemma," Hosea said. "People want privacy but at the same time want highly personalized content."

Assurances aside, other privacy advocates remain skeptical. Because privacy standards are not government regulated, businesses can easily change their minds without informing their customers in a prominent fashion.

"Business models can change and assurances of anonymity can be very fleeting," said David Sobel, general counsel at research group the Electronic Privacy Information Center.