As Smart TV Service Providers Feud In Court, The Privacy Issue Lurks In The Wings

SambaVersusAlphonsoThe battle for the living is taking two multiscreen TV targeting companies to the courtroom over an alleged patent infringement. The end result: The privacy policies of ad tech players tracking cross-screen behavior are coming under increased scrutiny.

The action, filed Nov. 6, is being brought by Free Stream Media Corp, which does business as Samba TV, against its rival Alphonso. The two companies, founded in 2008 and 2012, respectively, both provide TV analytics and second-screen targeting capabilities.

The suit [click here to read it in full] centers on patent 9,026,688, which bears the somewhat cumbersome but also fairly blunt title, “Real-Time and Targeted Advertising on Multiple Screens of a User Watching Television,” issued to Free Stream, aka Samba, on May 5 by the United States Patent and Trademark Office.

In other words, it’s a method to target users on their mobile devices with relevant content based on their TV viewing.

Samba, whose clients include PBS, Visa, Pepsi, Showtime, Red Bull and GM, has a business model that revolves around direct relationships with smart TV and set-top box manufacturers, including Toshiba, Sharp and Sony, which integrate the Samba software. Users then download an app – usually branded by the set-top box manufacturer – that connects their mobile device to their Internet-connected TV.

In April, Interpublic Group took a minority stake in Samba TV, although the value of the holding group’s investment was not disclosed.

Alphonso’s technology operates through an SDK made available to users either by Alphonso itself or through an authorized third party like an OEM [original equipment manufacturer], distributor or reseller with which Alphonso has a relationship. It uses audio signals to determine what a user is watching on TV in Shazam-like fashion through relationships with more than 5,000 apps, although Chordia declined to name which ones, other than to say that ”some are the largest apps in the app stores and some are long-tail.” [Nov. 25, 2015: A previous version of this article stated that Alphonso's technology is integrated into set-top boxes and smart TVs.]

Users have to opt in to allow access to their mic within the various apps for cross-screen content to be served. Chordia said ambient noise isn’t an issue – Alphonso can make its matches in less than a second – and that it never makes actual recordings. The necessary audio snippet is hashed and compared against an index of known sounds to figure out what ad is playing on a particular user’s TV.

Although Samba TV CEO Ashwin Navin declined to comment on the pending litigation under guidance from his attorney, Ashish Chordia, CEO of Alphonso, called the lawsuit “a minor distraction.”

“We are a relatively small company in a massively fast-growing market and we have big brands as clients who are happy with us, including Nike, Jaguar, Land Rover, ABC, NBC and Hulu,” Chordia said. “Active litigation feels feels like a tactic for not innovating.”

That may be, but other potential headaches are lurking. Awareness around cross-device tracking tactics is picking up steam, as evidenced by the workshop dedicated to the topic hosted by the Federal Trade Commission in Washington, DC, on Nov. 16.

An article in Ars Technica also kicked up a brouhaha in the days leading up to the workshop around a practice known as audio beaconing, by which inaudible, high-frequency sounds in ads are used to track user behavior across devices, including TVs, phones and tablets.

Neither Samba nor Alphonso use audio beaconing as part of their technology offering, but smart-TV companies have been called out for cross-screen tracking tactics.

In early November, journalistic watchdog ProPublica pointed a finger at Vizio, a manufacturer of connected devices including smart TVs, when it turned out Vizio was tracking the viewing habits of its roughly 10 million customers and sharing that information with partners. The problem was that Vizio had opted its customers in by default.

According to Chordia, Alphonso’s service requires a double opt-in – one on a user’s phone and one in the setting on a user’s set-top box – and a single opt-out. But although Alphonso ensures through its terms of service that its OEM and app partners have kosher opt-ins, that’s as far as it can go in terms of oversight.

“Other than that, we do not have any more control over those apps and we do not do anything else with those developers other than to provide our mobile SDK, which they can use,” said Chordia, who noted that users can also opt out of tracking and data collection full-stop by visiting Alphonso’s website and entering their device ID.

In Samba’s case, the service is also opt-in. New users are treated to a splash screen explaining the process the first time they fire up their TV, “rather than burying it in the terms and conditions,” Navin said. They also need to download the Samba app to their mobile device.

“I know this may sound kind of simplistic, but when we set out to build our privacy model, we did it with ourselves and our family members in mind as users,” Navin said. “How would my parents interact with this, for example? Because this is a new category of device that creates an unprecedented level of connectivity between the television and the web than was previously possible.”

Lawsuit aside, Chordia is mostly in agreement with his accuser in the privacy arena. Both companies occupy a new category and it’s best to tread lightly rather than rattle the regulators and the privacy pundits.

“This is such a new space and we are pushing the envelope, so we are aware that we need to do more,” said Chordia, who pointed to Alphonso’s membership on the Mobile Marketing Association’s privacy committee and its collaboration with the AdChoices program.

“The last thing we want to do to consumers is scare them,” Chordia said.

It’s a valid concern. As Justin Brookman, policy director at the FTC’s newly launched Office of Technology Research and Investigation said half jokingly at an International Association of Privacy Professionals event in Washington, DC, in mid-November, just a couple of days after the commission’s workshop on cross-device tracking: "If the relationship starts to feel adversarial with your things, if you’re looking at your TV kind of side-eyed and worry about what’s going on there, that could turn into a dangerous spiral.”

 

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