Corporate Welfare for Spyware Company?

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Corporate Welfare for Spyware Company?

by Ari Armstrong, October 6, 2005

Is Colorado subsidizing spyware?

My recent paper on wasteful spending describes state grants to DoubleClick, Inc. for $509,000 (see pages 9-10). Colorado First committed $238,000, while the Economic Development Commission (EDC) approved $271,000.

EDC's Activity Report 2003 states:

Double Click, Inc., Adams County -- Double Click, Inc. (DCI) began operations in 1996 and is currently headquartered in New York, with 1,100 employees worldwide. The company is a provider of Internet marketing products and services used by direct marketers and web publishers. Double Click helps companies plan, execute and analyze web-based marketing programs, including on-line advertising, email marketing, database marketing and research, and marketing analytics. In 1999, Double Click merged with Broomfield's Abacus, where 275 people are now employed. In 2001, the company purchased a 105,000 square foot data center in Thornton. DCI plans to consolidate its operations from New York and Toronto to a new headquarters location in Thornton. Double Click anticipates creating 271 net new jobs in Thornton over the next four years, with an average wage level of $60,000, which compares favorably to the average wage for Adams County. The Adams County Economic Development Council and the City of Thornton have committed $2,011,669 in personal property tax rebates and use tax rebates to the project. Colorado First and Existing Industry job training funds in the amount of $238,000 have also been committed. The Economic Development Commission approved a $271,000 performance-based grant based on the creation of 271 net new jobs at the Thornton facility over the next four years.

In a recent e-mail, Tom Bruno wrote, "I believe that DoubleClick is the purveyor of a spyware program or cookie that is initiated every time one logs onto common sites... If you run anti-spyware tools such as AdAware and CrapCleaner, DoubleClick is routinely removed. Am I to understand that we have subsidized a company that makes a product that we all must remove from our computers once a week or so, because it is a nuisance?"

Bruno then discovered a document used by the Graduate School of Business at Stanford University (Case Number: P-32, August 2000), "prepared as the basis for class discussion," titled, "DoubleClick and Internet Privacy."

The Wikipedia entry for DoubleClick (which may not have been thoroughly reviewed) states: "...DoubleClick divested its media business several years ago, and today DoubleClick is purely involved in ad serving from the technology end -- uploading ads and reporting on their performance. DoubleClick is sometimes linked with the controversy over spyware which is installed to track users as they travel from website to website and record what commercial advertisements they view and select while browsing. However, the company maintains that it is important to understand the difference between DoubleClick's ad serving tags and the spyware/adware companies. The companies which are most often referred to as spyware or adware represent programs external to the browser that may engage in activities such as: monitoring keystrokes or movement on the Web, examining files and programs installed on the user's hard-drive and generally behaving similarly to a virus. DoubleClick's DART, on the other hand, is well-governed within the framework of the browser. DART's opt-out policies are very straightforward and DoubleClick cookies are easy to identify and deactivate. Some years back, DoubleClick garnered some negative publicity from privacy advocates when they merged with Abacus Direct. The main problem was a possible invasion of privacy, however DoubleClick was cleared of these charges by the federal courts and state attorneys general. In April 2005, Hellman & Friedman, a San Francisco-based private equity firm announced its intent to acquire the company and operate it as two separate divisions with two separate CEOs for TechSolutions and Data Marketing. The deal was closed in July 2005."

As of a document sent to me by EDC on September 6 of this year, the "DoubleClick Incentive" grant is listed as "contracted."

A Google search of "DoubleClick spyware" generates some interesting links. An article from PCMag.com titled, "Spyware -- It's lurking on your machine," states, "With ad cookies from a company like DoubleClick, you may not have lost much, but there are circumstances in which cookies can be used against you..."

Andrew Kantor writes for the January 28 USA Today (updated February 15), "But cookies are, for the most part, not spyware. Most are benign or even helpful -- they save you the trouble of logging in to your favorite sites over and over, for example. Others, from companies like DoubleClick that serve ads, make sure you see different ads as you travel from site to site. And that's where some cookies do cross the line, or at least seem to. I said before that no site can read a cookie from another site. But many sites use separate companies to deliver ads -- companies such as DoubleClick. So even though you're at xyz.com, the ad you see is coming from doubleclick.net. If you then go to another site that serves DoubleClick ads, the DoubleClick folks know that because, in a sense, you've gone to two DoubleClick sites. Cookies like these are 'third-party cookies,' meaning that they're put on your computer by someone other than abcd.com or wxyz.com, in this case, DoubleClick provides the ads you see on both those sites. If you travel to a lot of sites served by DoubleClick... your surfing habits can be tracked. In fact, they are. These companies want to serve you ads you might be interested in, and they want to build up a profile of who's going where. Is that spyware? In a sense, perhaps. But it's just a tracking number on your computer. It doesn't do anything; it's not 'ware.' There are certainly privacy issues here, but not spyware ones."

Is what DoubleClick does legitimately called "spyware?" Whether it is or not, is it appropriate? Those matters are controversial.

What is obvious, though, is that at least some Colorado taxpayers do not like DoubleClick and do not wish to fund it. They should not be forced to do so.

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