Smart TV manufacturer Vizio Inc. has agreed to pay $2.2 million to settle charges brought by the Federal Trade Commission and the Office of the New Jersey Attorney General, for collecting viewer data without permission.
According to the complaint, Vizio's smart TV's were capturing "second-by-second information about video displayed on the smart TV, including video from consumer cable, broadband, set-top box, DVD, over-the-air broadcasts, and streaming devices."
The plaintiffs also found that Vizio was adding other data including sex, age, income, marital status, household size, education level, home ownership and household value. Vizio then sold this data to other companies, who used it for targeting advertising and marketing messages.
In addition to the payment, Vizio also has to delete all data gathered before March 1, 2016, and will expressly ask for permission to gather any additional data on viewers moving forward.
The data was collected as part of its "Smart Interactivity" feature that provides program recommendations and offers to viewers. But it was also collecting viewing data, which the agencies labelled unfair and deceptive, gathered without viewers' informed consent.
Obviously, this isn't great news for Vizio but it's also a small reminder to social networks who are planning to target the TV. All sorts of data is gathered online by the big web-scale players like Facebook and Google (Nasdaq: GOOG), and is a critical part of their value to advertisers. But following the same approach on the TV could be more challenging. (See Facebook Targets the TV for Future Growth.)
Combining social network data with TV viewing information could create incredibly detailed marketing profiles, but would also leave viewers with little privacy. It's not clear how permission would be obtained for such data gathering, or whether people will be as comfortable signing off on privacy issues on the TV. There has been tremendous interest in developing ways to target TV commercials, but managing privacy concerns will be an important requirement.
At the same time, Netflix Inc. (Nasdaq: NFLX) gathers a huge amount of data on viewer behavior and its recommendations and personalized features are important to its perceived value for subscribers. There is a difference though: Netflix does not sell that information to advertisers. But social networks' business models are entirely built on advertising, so they don't have the same option.
It's worth noting that Vizio says the data it gathered was held anonymously, and that it never paired data with personally identifiable information. Still, knowing someone is watching what you are viewing on TV seems more invasive than sharing holiday photos on Facebook, at least to me.
I would expect more privacy concerns to emerge as web content (and practices) are brought into the TV world.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation