Call for Investigation of Smart TV Industry

Thursday, July 26, 2018

Two Senators Call for Investigation of Smart TV IndustryTwo Senators Call for Investigation of Smart TV Industry

Senator Edward J. Markey sent a letter, also signed by Senator Richard Blumenthal, to the Federal Trade Commission on Thursday expressing concern that Samba TV wasn't transparent with viewers about data it collected.CreditChip Somodevilla

By Sapna Maheshwari

* July 12, 2018 * o o o o o

Two Democratic senators have asked federal regulators to investigate the business practices of smart-television manufacturers amid worries that companies are tracking consumers' viewing behavior without their knowledge.

In a letter on Thursday to Joseph Simons, the chairman of the Federal Trade Commission, Senators Edward J. Markey of Massachusetts and Richard Blumenthal of Connecticut said they were concerned about "consumer privacy issues raised by the proliferation of smart-TV technology."

Companies are using new tools to identify and log what people are watching as part of an effort to profile consumers and direct ads to other devices in their homes. The letter cited a New York Times article , published last week, that detailed the practices of Samba TV, a San Francisco software company. Privacy advocates have criticized the company for not being transparent with consumers when it seeks permission to track their viewing on internet-connected TVs to sell ads.

"Regrettably," the senators wrote, "smart-TV users may not be aware of the extent to which their televisions are collecting sensitive information about their viewing habits." The letter went on to argue that Samba TV "does not provide sufficient information about its privacy practices to ensure users can make truly informed decisions."

Samba TV, which said it collected viewing data from 13.5 million homes in the United States, has struck deals to place its software on certain sets from Sony, Sharp, TCL, Philips and other brands. The company essentially pays television manufacturers to be included on their sets, saying its business model "does subsidize a small piece of the television hardware," though it declined to provide further details.

When consumers set up a TV with built-in Samba software, they encounter a screen asking them to enable Samba Interactive TV. The opt-in language reads: /"/Interact with your favorite shows. Get recommendations based on the content you love. Connect your devices for exclusive content and special offers. By cleverly recognizing onscreen content, Samba Interactive TV lets you engage with your TV in a whole new way."

The letter says the language that asks TV owners to activate built-in Samba software "does not clearly convey how much sensitive information about a user will be collected or whether the data will be used for targeted advertisements across different devices."

Most consumers agree to enable the software, which allows Samba to monitor their TV habits on a nearly second-by-second basis, identifying video games, HBO shows, political debates and more. The company may then use the data to direct ads to phones and laptops that share the TV's internet connection.

Mr. Markey and Mr. Blumenthal, who are members of the Senate Committee on Commerce, Science and Transportation, said the opt-in language "does not clearly convey how much sensitive information about a user will be collected or whether the data will be used for targeted advertisements across different devices." The senators noted that data privacy and disclosure rules had long applied to cable operators and satellite carriers but "do not cover data companies using internet connectivity" to track smart-TV viewing.

In a statement on Thursday, Bill Daddi, a spokesman for Samba TV, said that the company shared "Senator Markey's concerns about data privacy." He added, "There is more to be done here, and we will work with any member of Congress on this issue, as we have throughout the past few years."

Mr. Daddi also said that the Federal Trade Commission had "already reviewed our opt-in language and policy" and that Samba TV had made revisions based on the agency's guidance. However, when asked previously about Samba TV, a spokeswoman for the commission said the agency does not "endorse or bless companies' practices."

Privacy concerns have landed companies, from TV manufacturers to outside data companies, in legal trouble. Vizio, for example, paid $2.2 million last year to settle claims by the Federal Trade Commission and the State of New Jersey that it was collecting and selling data from millions of smart TVs without the knowledge or consent of set owners. The company is working toward a settlement in a separate class-action lawsuit in California centered on the tracking software in its TVs.

The letter from the two senators does not necessarily mean the Federal Trade Commission will take action, but "there has been a historical recognition that TV viewing can be pretty sensitive," said Justin Brookman, a former policy director at the commission who is the director of consumer privacy and technology policy at the advocacy group Consumers Union.

Juliana Gruenwald, a spokeswoman for the Federal Trade Commission, confirmed receipt of the letter and declined to comment further.

The opt-in screen for Samba Interactive TV that many users see when setting up smart TVs. A Samba spokesman said Thursday that the Federal Trade Commission had "already reviewed our opt-in language and policy."CreditChris Heinonen/Wirecutter

The senators' letter draws attention to the challenging business of TV manufacturing, which provides an opening for data companies. Selling access to consumer data could help companies pad thin margins, particularly on smaller sets.

"If you think of the cheap 32-inch, 40-inch, 50-inch TVs - most of the TV manufacturers are lucky if they break even on those sets," said Paul Gagnon, an analyst for IHS Markit. Profits typically come from larger sets.

Tracking software has also appeared as part of expensive models. David Kitchen, a software engineer in London who described his frustration with Samba TV's tracking in last week's Times article, said he had paid about 1,000 pounds (about $1,300) for a Sony Bravia set that asked him to enable the software.

At the end of last year, about 45 percent of TV households in the United States, or 56 million homes, had at least one smart TV, according to IHS Markit data. Smart TVs accounted for 70 percent of all television shipments to North America last year, said the firm, which forecasts the share to rise to 78 percent this year.

"In terms of practical things the F.T.C. could do, one is filing additional enforcement actions, which, in addition to curtailing individual companies' practices, can send a powerful 'clean up your act' message to industries," said Jonathan Mayer, an assistant professor of computer science and public affairs at Princeton University and a former technology adviser at the Federal Communications Commission.

The Federal Trade Commission could also do a "sweep" of the smart-TV industry, which would mean testing smart TVs from major manufacturers and potentially taking enforcement action based on its findings, he said.

Marc Rotenberg, president of the Electronic Privacy Information Center, has been pressing the Federal Trade Commission on smart TVs and privacy since 2015 and said he was hopeful that the senators' letter would prompt action.

"A device is a device," Mr. Rotenberg said. "A person should be able to plug it into the wall, connect into the internet and not worry that what happens next is going to be recorded."

A version of this article appears in print on July 12, 2018, on Page B2 of the New York edition with the headline: Senators Urge Investigation of Smart TV Industry, Citing Privacy Concerns. Order Reprints | Today's Paper | Subscribe

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