Apple and Android users – put down your smartphones and read this. Could your favorite apps betray you?
Online music service Pandora and other makers of some of the most popular smartphone apps on the market are reportedly under investigation by a federal grand jury over concerns they are sharing personal information about their users to third parties and online advertisers.
Federal prosecutors in New Jersey are said to be examining whether mobile marketers violated a computer fraud law by collecting or transmitting user information without properly disclosing what they were doing, according to a report in the Wall Street Journal.
Pandora says it does share information with third parties to deliver targeted advertising and track how users use the service, but that it was not “a specific target of the investigation,” which it identified as “industry-wide” and covering “numerous other smartphone applications.”
The company said it received the subpoena in early 2011 and believed the grand jury “was convened to investigate the information sharing processes of certain popular applications that run on the Apple (AAPL) and Android mobile platforms.”
Pandora was forced to reveal its involvement in the investigation as part of an unrelated filing with the Securities and Exchange Commission (SEC) on Monday detailing a planned initial public offering.
The attention of lawmakers and privacy watchdogs over consumers’ privacy to date has focused largely on the Internet and how to regulate online advertising through measures such as ‘do-not-track’ opt-out option for consumers.
The revelation from Pandora is the first sign that federal prosecutors are sharpening their glaze on the mobile industry, and signals the growing concern over how users’ personal information is handled as smartphones become more popular and apps offer more conveniences.
The brief details of the investigation offered in Pandora’s SEC filing leave open why federal officials are investigating criminal violations among app makers, a situation unusual in privacy cases, according to legal experts.
Neither Pandora nor federal officials have commented beyond the SEC filing.