Column: Yahoo Should Sue NY Attorney General Spitzer

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That's right. Yahoo shareholders should file a class action lawsuit against New York Attorney General Eliot Spitzer.


For what? For all the revenue Yahoo failed to bring in - and the resulting depressed share price - for 18 months as Yahoo was prevented from marketing its paid services to its 200 million subscribers while Spitzer's office conducted an asinine "investigation."


Spitzer's probe resulted from complaints over notices Yahoo began sending subscribers in March 2002 informing them that it was opting them into receiving information from Yahoo in 13 marketing categories - frankly, a small price to pay for a free e-mail address. The notices gave users 60 days to opt out, and did not attempt to opt them in to advertising from third parties.


On Oct. 1, after a year and a half of jerking Yahoo around, Spitzer's office issued a press release crowing that it had reached a settlement with the company that "will protect consumers from unwanted e-mail and telemarketing campaigns and ensure that they understand and control marketing solicitations."


Nonsense.


All that Yahoo, Sunnyvale, CA, agreed to do that it hadn't already done was to send another round of notices before resuming whatever its marketing plans are with these users, and that was only because the old notice was sent out so long ago. Yahoo also agreed to "pay $75,000 to cover the costs of the investigation," a euphemism for agreeing to pay $75,000 to get Spitzer to shut up and go away.


Spitzer's office could have just as substantively put out a statement saying that Yahoo agreed not to market pornography to children, or that it agreed not to share subscribers' home phone numbers with death row inmates.


But with no-call lists and spam making national headlines, Yahoo's e-mail marketing plans offered too fat a target for Spitzer the political opportunist to ignore.


"Yahoo will now be required to give these consumers clear notice of Yahoo's policies, along with the ongoing opportunity to opt-out of e-mail marketing and Yahoo will be prohibited from telemarketing to these consumers," Spitzer's press release said.


The statement added that Yahoo agreed to provide consumers with notice 30 days before the effective date of any changes to its marketing program and inform them how to opt out or delete their account.


However, the notices that triggered Spitzer's sham investigation in the first place already had informed consumers how to opt out, and gave them 60 days to do it.


As for telemarketing, Yahoo spokeswoman Nissa Anklesaria said: "We had no plans then, and we currently have no plans to market our consumer products via phone."


An honest press release from Spitzer's office would have said something along the lines of, "Yahoo Vindicated in Privacy Witch Hunt; NY AG Apologizes for Being Such a Nudge."


But a scan of national press coverage reveals that Spitzer's PR stunt had its intended puppy-dog effect on most of the media.


"Yahoo users will now be protected from unwanted e-mail and telemarketing campaigns," began an Associated Press piece. "Yahoo customers have landed a big win," began another piece by the same agency.


"Yahoo agreed to alter the way it markets to its customers as part of a settlement with New York State Attorney General Eliot Spitzer," reported CNET under the headline, "Yahoo Settles Telemarketing Dispute." Shhh. Don't tell CNET, but there was no telemarketing dispute.


And then there was the following whopper from IDG News Service: "Yahoo Inc. will change its marketing policy after being told by New York Attorney General Eliot Spitzer that its practices were 'neither appropriate nor legally permissible,' his office said."


No wonder so many people consider journalism a bottom-feeder profession.


Actually, Spitzer's statement said: "It is neither appropriate nor legally permissible for a company to compile a database of personal information through an online registration process and then attempt to use the information for telemarketing purposes to target consumers who have stated that they do not want to receive solicitations. Moreover, consumers need and the law requires adequate and effective notice about changes to the way a company utilizes a consumer's personal information."


It also is neither appropriate nor legally permissible to torture small animals, and Yahoo wasn't doing that, either.


Nowhere does Spitzer's release say Yahoo engaged in illegal or even questionable behavior. But the implication is obvious.


Spitzer clearly turned up nothing wrong in Yahoo's marketing practices, and his appallingly spun press release should have said so. But that kind of straight shooting would have done nothing to build Spitzer's credentials as a high-minded crusader against the dark forces of evil corporate greed.


On an unrelated topic, in my Sept. 29 column, I mistakenly implied that operators of anti-spam blocklisting site Spamhaus.org subscribe to the lame argument that blocklists don't actually block anything; they just publish lists that e-mail administrators can choose to use or ignore. Spamhaus.org's director Steve Linford contacted me and gave me proof that he has long publicly refused to hide behind the we-don't-block-anything copout. I was wrong in implying he does and apologize to Linford for mischaracterizing him.


And on another unrelated topic, this is my last column for DM News. By the time this piece appears, I will have begun my new job as a reporter for the New York Sun.


This column has been the most professional fun I've ever had. To everyone who has spent any time reading it: thank you. I'm truly honored. I still can't imagine not writing it. ... Now, however, maybe I can talk to my doctor about lowering some of my blood pressure medication.


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