Datamining Dilemma: Amazon.com Stirs Internet Controversy

"The Microsoft File: The Secret Case Against Bill Gates" is a bestseller among Microsoft employees. At MCI WorldCom, they’re buying "The Electronic Day Trader." At the Library of Congress, "Gary Null’s Ultimate Anti-Aging Program" is a hit. And at National Semiconductor, it’s not just circuits: "101 Nights of Grrreat Sex" is on the company’s Top 10 list.

All of this information is revealed by the online bookseller Amazon.com, which has started featuring thousands of individual bestseller lists calculated by Zip codes, workplaces and colleges — wherever its customers are ordering from. With a simple mouse click on the company’s World Wide Web site, you can peek behind the scenes at the books that specific groups are reading as well as the compact discs they’re listening to and the videos they’re watching.

Amazon describes it as "fun" -- and happily announced the feature in a press release last week that was followed by a number of media reports. Soon after, however, citing complaints from customers, the company began backtracking. Customers can now opt out of having their data collected, provided they’re savvy enough to read the fine print.

The episode underscored again the power of Web technology to collect vast details about the likes, dislikes and buying habits of millions of consumers and zoom in on the data in ways unprecedented in the annals of marketing.

"We’re taking chances, we’re innovating here," said Amazon spokesman Paul Capelli. "This program is building community and adding a unique feature that never could have existed before the Internet."

The chief executive of the trade group to which Amazon belongs, the American Booksellers Association, had a different view. "This is outrageous," said Avin Mark Domnitz. "One of the things that people are afraid of with computers is that they are so powerful, [that] they collect extraordinary amounts of information about individuals. We could create an environment where people are afraid to go online."

"You can’t say there isn’t a privacy invasion here," said Robert Biggerstaff of the National Association Mandating Equitable Databases, a consumer group. "It’s not traced back to the individual, but they are invading the privacy of the company.

"It’s unfair to the company to identify their employees as having these particular reading tastes, and it’s risky for the employees, who might be buying a book that causes them to receive scrutiny from their employer," Biggerstaff added.

Amazon said its point in publishing the lists, besides "fun," is to help consumers buy more books and tapes. "If you realize that everyone around you is buying a certain book or CD, you might think, ‘Maybe I’ll get this too,’ " said Capelli.

Donna Hoffman, co-director of the electronic-commerce center at Vanderbilt University, sees the Amazon program, called Purchase Circles as "a clever tool, but it has very dark privacy implications. If I come up with better tools to attract you to my Web site, I can learn more about you. The more I can personalize my site for you, the more I can customize my offering, the more interesting it will be to you. Amazon is showing the power of mining the database."

"One of the big question marks surrounding electronic commerce is privacy, and the lack of confidence that many potential customers have about transacting [business] online," said David Sobel, general counsel of the Electronic Privacy Information Center.

"It doesn’t seem like a good business decision to do something that highlights your collection of customer profiles," he added. "It throws fuel on the fire."