DealBook: As Twitter Opens Up, Employees Do, Too

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Justice Dept. Opens Criminal Inquiry Into I.R.S. Audits

The activities of I.R.S. officials are already the subject of an investigation by the agency’s inspector general. The results of that inquiry, which are expected in the next several days, are likely to detail how officials at the agency selected political groups for extra scrutiny about their tax status.

Speaking at a news conference called on Tuesday to discuss Medicare fraud, Mr. Holder said that he had ordered a second investigation to determine whether any criminal laws may have been broken by the officials at the tax collection agency.

The attorney general said there were “a variety of statutes within the I.R.S. code” that could be the basis of a criminal violation. He said officials conducting the investigation would also look at “other things in Title 18” of the United States Code. Title 18 is the overall criminal code for the federal government.

Mr. Holder also fielded questions about the seizure of telephone records from reporters and editors at The Associated Press, which apparently came in connection with an investigation of leaks inside the executive branch.

Mr. Holder said that he had recused himself last year from the leak investigation and therefore had not made the decision to seek sweeping subpoenas for two months of call records for 20 telephone lines used by The A.P. and its journalists. He said he decided to turn over supervision of leak inquiries to his deputy, James M. Cole, “to make sure that this investigation was seen as independent” after F.B.I. agents interviewed him about leaks in June 2012.

But Mr. Holder said that the leak in question — the revelation by The A.P. of a foiled terrorist plot by Al Qaeda’s branch in Yemen a year ago — was among the two or three most serious leaks he had seen since the 1970s. “It put the American people at risk,” he said, without elaborating.

Mr. Holder said he was confident that his subordinates had sought the subpoenas in accord with Justice Department regulations. Members of Congress and press advocates have expressed concern about the subpoenas, revealed on Monday by The A.P., as a dangerously broad incursion into the ability of the news media to operate without government scrutiny and a violation of press freedom.

Mr. Holder declined to say whether he had also recused himself from a separate investigation of unauthorized disclosures to The New York Times about American cyberattacks on Iran’s nuclear program.

The leak about the Yemen plot is being investigated by the United States attorney for the District of Columbia, Ronald C. Machen Jr., and the disclosures about the cyberattacks on Iran are being examined by the United States attorney for Maryland, Rod J. Rosenstein.

The White House deflected questions on both controversies during its own press briefing Tuesday.

The press secretary, Jay Carney, said he could not comment on the Justice Department’s actions amid the continuing investigation. He was similarly reticent about the I.R.S., citing the investigation by the inspector general of the agency, which he said would shed more light on what happened. I.R.S. officials have admitted singling out dozens of Tea Party-inspired groups that had applied for tax-exempt status, submitting them to detailed questioning.

On Monday, President Obama said he would not tolerate such behavior by the I.R.S. and promised to “make sure that we find out exactly what happened on this.”

The raft of allegations, on top of a recurring dispute over the White House’s handling of the deadly attack on the American diplomatic mission in Benghazi, Libya, has put Mr. Obama on the defensive more so than at any other time in his presidency, threatening to engulf his domestic agenda.

At the daily news briefing, Mr. Carney manifested the difficult spot in which the White House finds itself, dodging and weaving under tough questioning over the leak investigation, the I.R.S. case and Benghazi.

Mark Landler contributed reporting.

F.T.C. Opens an Inquiry Into Data Brokers

The Federal Trade Commission on Tuesday opened an investigation into data brokers, the companies that collect and sell information about consumers for marketing and other purposes.

The agency issued administrative subpoenas to nine different information resellers, requiring each company to provide extensive details about how it collects information about consumers; how it uses, stores, analyzes and shares that data; and whether the company allows consumers to access and correct the records the company holds about them. Some of the companies named in the inquiry do not directly sell information about consumers, but offer analytics services in which they categorize, score or evaluate consumer data.

The companies include Acxiom of Little Rock, Ark., one of the world’s largest information resellers, which manages customer databases for major banks, automakers and retailers; eBureau, a company in St. Cloud, Minn., which, on behalf of clients like credit card companies, lenders, insurers and educational institutions, evaluates and scores online consumers in the market for those companies’ products; Intelius, a company in Bellevue, Wash., which offers people-search look-up services and background checks; and PeekYou, a company that analyzes social media sentiment. Acxiom and eBureau were the subjects of separate articles this year in The New York Times.

In an e-mail message in response to a reporter’s query, Gordy Meyer, the president of eBureau, wrote that the company “welcomes the opportunity to describe, to the F.T.C., its practices and the benefits we provide to businesses as well as consumers.” Representatives of other companies did not immediately return e-mails from a reporter seeking comment.

The F.T.C.’s action comes nine months after the agency issued a report on consumer privacy, calling on data brokers to make their practices more transparent to the public. Because most data brokers are business-to-business enterprises, regulators say, many consumers are not aware that such companies may compile and sell hundreds of details about their race or ethnicity, financial status, shopping habits, health interests, vacation preferences, Web browsing history, online search queries and other matters. In fact, some larger data brokers have collected more than 1,000 pieces of information each on a majority of adults in the United States. Regulators say they are concerned that the information could be used to unfairly narrow or limit the kinds of financial, insurance, health, education or other offers certain consumers receive.

“Data brokers aggregate huge amounts of data on individuals and have the capacity to create powerful profiles combining information about what you do offline and online,” David C. Vladeck, the director of the F.T.C.’s Bureau of Consumer Protection, said in a phone interview Tuesday. “We worry that this information may be used in ways that could be harmful to consumers.”

In a statement, the Direct Marketing Association, an industry trade group, welcomed the F.T.C. investigation, saying the results would highlight the “significant benefits” consumers derive from receiving marketing pitches that are based on information about their personal tastes and activities.

Yet some legislators and regulators say they are taking a harder look at the industry because of practices that are opaque to consumers. Unlike consumer reporting agencies, for example, which are required by federal law to show consumers their credit reports and allow them to correct errors in their own records, data brokers who collect and sell consumer information for marketing purposes are not required to give individuals access to the records those companies hold about them. In its report earlier this year, the F.T.C. asked Congress to consider enacting regulations to give consumers some rights to data collected about them.

The F.T.C.’s investigation represents at least the fourth inquiry into the industry this year.

In July, Representative Edward J. Markey, Democrat of Massachusetts, and Representative Joe L. Barton, Republican of Texas, co-chairmen of the Bipartisan Congressional Privacy Caucus, started an examination into the practice of nine data collectors. That investigation is continuing; the lawmakers held a public briefing in the House with executives from the companies last Thursday. In October, Senator John D. Rockefeller IV, Democrat of West Virginia, opened his own investigation into nine information resellers . (Each investigation involves different companies, although a few companies were included in more than one inquiry). The Government Accountability Office has also started its own research into the industry.

But the F.T.C.’s 15-page administrative orders require each company to provide much more detailed information than the legislators asked for.

“We are going to get a huge amount of data,” Mr. Vladeck said. “We are going to get answers.”

Video Game Art Exhibition Opens Today

A free exhibition showcasing the very best in video game art is taking place at London's City Hall all this week.

The exhibition, which includes never-before-seen works based on massive titles such as Batman: Arkham City, Tomb Raider, Dishonored and Guild Wars 2, has been organised by Ukie as part of this year’s London Games Festival.

Thanks to the success of a number of UK studios including Rocksteady, Sports Interactive, Mind Candy and MediaTonic, the UK games industry was valued at around £3 billion last year and, to celebrate, they've all provided art to the exhibition. And next week it will be auctioned off for the charity SpecialEffect.

If you haven't heard of SpecialEffect before, it's an incredibly inspiring charity that IGN teamed up with for our most recent Pub Quiz, and you can find out more about them here. The charity's aim is to help children with disabilities have a better quality of life through video games.

Admission to the exhibition costs nothing, and it will run until 6pm on Friday, October 26th. Considering the quality of the art and the fact that much of it, notably the Batman: Arkham City work signed by the creative team and the Fable 3 posters signed by Peter Molyneux and other Lionhead bigwigs, has been exclusively created for this event, hopefully it'll raise a lot of money for this very worthy cause.

Having been to City Hall ourselves to see the art, we strongly recommend you head down there if you have time this week. If not, you can have a look at some of the stuff on show below, and head over to www.londongamesart.com from Monday to bid on any of the pieces that take your fancy.

 

Senator Opens Investigation of Data Brokers

On Wednesday, Senator John D. Rockefeller IV, Democrat of West Virginia, opened an extensive investigation of nine leading information brokers. Because Americans now conduct much of their daily business online, the senator said he was concerned that “an unprecedented amount” of personal, medical and financial information about people could be collected, mined and sold, to the potential detriment of consumers.

“An ever-increasing percentage of their lives will be available for download, and the digital footprint they will inevitably leave behind will become more specific and potentially damaging, if used improperly,” Mr. Rockefeller, who is the chairman of the Senate Committee on Commerce, Science and Transportation, wrote in letters to the data brokers. “It is critical that we understand what information companies like yours are already collecting and selling.”

Linda A. Woolley, the acting chief executive of the Direct Marketing Association, a trade group, called the senator’s investigation “a baseless fishing expedition.”

“I hope Senator Rockefeller understands what he’s tampering with,” she said in an e-mailed statement.

The Senate investigation represents the second Congressional inquiry into the industry’s practices this year. In July, Representative Edward J. Markey, Democrat of Massachusetts, and Representative Joe L. Barton, Republican of Texas, co-chairmen of the Bipartisan Congressional Privacy Caucus, began a House inquiry into data compilers, which is ongoing. And the Federal Trade Commission has been looking into the practices of about a dozen major data brokers.

Data brokers collect a wide variety of information from public sources and third parties, including details like consumers’ financial status, race or ethnicity, buying history, hobbies, health concerns, travel preferences, Internet providers and social networks.

The companies often use the information for a practice called “database marketing” — that is, using data mining to help clients like retailers, banks and airlines tailor marketing pitches to their best customers or identify potential new ones.

Collecting, analyzing and selling such information for marketing purposes is perfectly legal. Indeed, it’s a huge business. Some data brokers have said they maintain several thousand details on the majority of adults in the United States.

But some legislators and regulators say they are concerned that neither they nor consumers know the extent of the material that data brokers collect; whom they disclose or sell it to; and exactly what they are doing with it.

Unlike consumer reporting agencies, which are required by federal law to show people their own credit reports and allow them to correct errors, data brokers are not required to show consumers information collected about them for marketing purposes.

Earlier this year in a report on protecting consumer privacy, the F.T.C. urged the industry to create a centralized Web portal where consumers could learn about companies’ practices and their options for controlling information collected about them. The agency also recommended that Congress pass legislation giving people access to information that data brokers hold about them. Underlying regulators’ efforts is their concern that some information brokers could create financial dossiers about individuals that are akin to credit reports and use them to unfairly exclude individual consumers from certain offers or charge some people higher prices than others.

“There are data brokers whose marketing lists may not cross the line into credit reports but come very close,” said Julie Brill, a member of the F.T.C. “The question is whether the lists are being used for marketing purposes or for something very close to credit purposes.”

Industry representatives say that data-based marketers use consumer marketing data for legitimate commercial practices, not for regulated purposes like making offers of credit or insurance.

They add that collecting marketing data benefits consumers because it allows companies to send people offers for products and services they are interested in. It also increases efficiency because companies know ahead of time not to send pitches for, say, lawn mowers to people who live in apartments.

“Consumers love getting what they want — information, products, benefits, upgrades — when they want it,” said Ms. Woolley of the Direct Marketing Association. “There is no evidence that data-driven marketing harms consumers in any way.”

On Wednesday, Mr. Rockefeller sent letters of inquiry to established database marketers like Acxiom, headquartered in Little Rock, Ark.; credit reporting agencies like Experian and Equifax, which have separate marketing arms; and newer companies, like Rapleaf and Datalogix, that specialize in helping companies pursue online and mobile consumers.

Mr. Rockefeller asked each company to provide extensive business details about its data collection operations since Jan. 1, 2009.

Scott Howe, the chief executive of Acxiom, said the company looked “forward to continuing to work with the Congress to help the members gain a deeper understanding of Acxiom’s business and how people and the economy benefit from the appropriate use of data.”

In an e-mail, Demitra L. Wilson, a spokeswoman for Equifax, said the company is not a data broker and that the only a small portion of its business involves unregulated, aggregated data about consumers.

And Gerry Tschopp, a spokesman for Experian, said the company welcomed the opportunity to discuss “the benefits of the appropriate use of consumer data” with legislators.

Representatives of Datalogix and Rapleaf did not immediately respond to e-mail and phone requests for comment.

Mr. Rockefeller asked the companies to respond by Nov. 2.

Congress Opens Inquiry Into Data Brokers

In a move that could lay bare the inner workings of the consumer data industry, eight members of Congress have opened a sweeping investigation into data brokers — companies that collect, collate, analyze and sell billions of details annually about consumers’ offline, online and mobile activities for marketing and other purposes.

Representative Edward J. Markey, Democrat of Massachusetts, and Representative Joe L. Barton, Republican of Texas, co-chairmen of the Bipartisan Congressional Privacy Caucus, along with six other lawmakers, sent letters of inquiry on Tuesday afternoon to nine leading industry players. In the letters, the legislators requested extensive information about how the companies amass, refine, sell and share consumer data.

Data brokers often collect details about people’s financial, retail and recreational activities to help clients like airlines, automakers, banks, credit card issuers and retailers retain their best customers and woo new ones.

The letter’s recipients included marketing services firms like Acxiom and Epsilon; consumer reporting agencies like Experian and Equifax, which have separate credit reporting and consumer analytics divisions; Fair Isaac, now known as FICO, the credit scoring services company; and Intelius, a company that offers reverse phone look-up and background check services. The letter gave the companies three weeks to respond.

The Congressional inquiry heightens the scrutiny of a largely unregulated industry whose companies sell their services to third parties, rarely interacting directly with consumers.

In 2010, the Federal Trade Commission began its own investigation into the practices of more than a dozen data compilers. One of those companies, Spokeo, recently agreed to settle charges with the government that it had violated federal law by selling consumers’ personal data for employment screening. Enforcement actions against several other data brokers are pending, the agency said.

Now Mr. Markey says he wants the Congressional investigation to further expose data broker practices, saying some had the potential to affect people’s access to education, health care, employment or economic opportunities.

But Mr. Markey’s ultimate goal is to determine whether legislators should enact a law regulating the industry. Unlike consumer reporting agencies, which are required by federal law to show people their own credit reports and allow them to correct errors, information brokers are not currently required to show consumers information collected about them for marketing purposes.

“We have gone from an era of data keepers to this new era where data reapers are able to create very complex profiles of every American,” Mr. Markey said in a telephone interview.

He said he was particularly troubled by data broker programs that categorize individual consumers as desirable or undesirable sales prospects, often without their knowledge and consent, a practice that he said raised privacy concerns. “I’m hoping to ratchet up the transparency so we can foster a system of oversight and consumer control over their data.”

The privacy caucus’s letter was prompted by an article last month in The New York Times about Acxiom, based in Little Rock, Ark. Mr. Markey’s office gave The Times a copy of the letter.

Jennifer Barrett Glasgow, the chief privacy officer of Acxiom, said company executives had testified before Congress numerous times to inform legislators about the steps they take to protect consumers. “We are happy to provide whatever information we can to further inform interested parties,” she said.

Other industry representatives did not immediately respond to requests for comment.

The privacy caucus does not have subpoena power. But Mr. Markey said other industries, like cellphone carriers, had complied with his requests in the past. He said he expected similar cooperation from data brokers.

The letter asked each company to provide a list of all of its sources of data; a list of the specific kinds of consumer information, including ethnic, race or religious data, it collects; descriptions of the data collection methods used, like tracking of social network or mobile phone activity; explanations about each product and service the company has marketed to third parties since January 2009, and the type of data used in such products and services; details about whether any of the products or services are federally regulated; explanations about the security measures used to protect consumer data; as well as descriptions of the opt-out, data access, correction and deletion options the company offers consumers.

The direct marketing industry already offers consumers choices about managing marketing pitches sent through the mail. Digital marketers have a program for people who wish to opt out of receiving online ads tailored to their behavior.

But Mr. Markey said consumers also needed greater access to data collected about them so they could make more informed choices.

“You have to make sure that the values of the physical world accompany the transition to the virtual, digital world,” he said.

LittleBigPlanet Karting Beta Opens for PS Plus Members

Sony has announced that all European PS Plus members will be able to download the LittleBigPlanet Karting beta for the next 24 hours.

The company made the announcement on the EU Playstation Blog, but stressed that the download would only be available until 3pm tomorrow.

The beta is due to run until July 31 with Sony aiming "to get feedback on the overall experience from Sackfolk who understand it like few others". If you're a PS Plus member then don't waste any time in grabbing the beta while it's available.

For more info about LittleBigPlanet Karting, which is due out later this year, check out our preview.

Europe Opens New Microsoft Inquiry

Microsoft immediately apologized, calling it a technical problem it had learned of only recently. “We deeply regret that this error occurred and we apologize for it,” the company said in a statement .

But the software giant could nonetheless face a substantial fine for breaching the Europe Union’s antitrust rules by defying the terms of a settlement.

“If the infringements are confirmed, there will be sanctions,” said Joaquín Almunia, the European Commission official in charge of antitrust enforcement. He vowed to use “legal instruments with all my capacity to deter and to punish.”

The confrontation is a setback of sorts for the commission, the European Union’s executive agency, which has been trying to find non-litigious solutions to antitrust problems, particularly in the fast-moving technology field, to prevent cases from dragging on for years.

Mr. Almunia’s office is negotiating with Google to try to settle the commission’s concerns about the company’s dominance of the Internet search and advertising markets. The resumed compliance struggle with Microsoft, some legal experts said, could harden his position with Google.

Mr. Almunia’s announcement “sounds like a warning to Google and to other technology giants in the commission’s line of fire,” said Nicolas Petit, a law professor at the University of Liège in Belgium. It shows that “settling a case is not the end of the story” and that companies must follow up with “effective monitoring mechanisms.”

Mr. Petit pointed out that more than a year and a half went by in the case announced Tuesday before other companies in the sector reported the problem and the commission took action, “which suggests that this approach just did not work” because “no one noticed.”

In announcing the action on Tuesday, Mr. Almunia said Microsoft committed a serious breach of E.U. antitrust rules by not complying with commitments the company made in 2009 as part of the settlement. Those sanctions, he added, could be particularly severe because, if confirmed, this would be the first time a company had defied an antitrust settlement offered by the commission.

The potential fine could be up to 10 percent of a company’s global annual revenue. In Microsoft’s case that could mean a penalty of $7 billion, but it is probably unlikely to reach that level. The largest single fine ever levied by the European antitrust authorities was €1.1 billion, or $1.4 billion, in 2009 against Intel for abusing its dominance in the computer chip market. Intel is still appealing ruling.

The issue on Tuesday stems from the settlement of a case concerning Microsoft’s dominance in Internet browsers.

In Microsoft’s 2009 settlement, the company did not pay a fine but instead committed to installing a system called Browser Choice Screen with Windows to offer users alternatives like Chrome and Firefox to counter the strength of Internet Explorer, Microsoft’s own browser product.

On Tuesday, Microsoft blamed “a technical error” for not offering users the choice of browsers it had promised. The error affected 28 million personal computers running Windows 7 SP1, the company said in a statement.

The company said it only learned recently of the error when the commission sent a notification about reports it had received indicating that alternative browsers were not being offered on some personal computers.

Microsoft also said it took immediate steps to resolve the issue, and said it would send all affected users’ computers a software update by the end of this week allowing users to choose a browser other than Explorer.

“We have fallen short in our responsibility,” Microsoft said in a statement. “While we have taken immediate steps to remedy this problem, we deeply regret that this error occurred and we apologize for it.”

Mr. Almunia also said Tuesday that more should be done in the future to monitor settlements in order to ensure that breaches do not go undetected for long periods of time.