Commercial Alert Calls Web-Filter Company N2H2 a "Corporate Predator"

[Gary Ruskin]

Commercial Alert 			January 29, 2001

Following are a news release and Wall Street Journal article about the
Web-filter company N2H2.

NEWS RELEASE

For Immediate Release:			For More Information Contact:
Monday, January 29, 2001		Gary Ruskin (202) 296-2787

Commercial Alert Calls Web-Filter Company N2H2 a "Corporate Predator," 

Asks Defense Sec. Rumsfeld Not to Hire N2H2 to Spy on American
Schoolchildren

Following a news report that the Web-filtering company N2H2 Inc. gathers
data on children as they surf the Web in school and sells it to
marketers and the Defense Department, Commercial Alert director Gary
Ruskin called N2H2 a "corporate predator that snoops on schoolchildren
for monetary gain."  Commercial Alert urged parents, school board
members, principals and teachers to rid the schools of N2H2's
child-tracking software.  

Commercial Alert sent a letter today to Secretary of Defense Donald H.
Rumsfeld asking the Defense Department not to hire N2H2 to spy on the
Web-browsing of the nation's schoolchildren.  The letter said that
"During the Clinton Administration, the Defense Department must have
grown confused about its mission.  It should spy on national security
threats, not our own schoolchildren."

On January 26th, The Wall Street Journal reported that N2H2's Bess
filtering system "knows where the students go on the Web and how long
they spend there....Late last year, N2H2 began selling its data.  The
information, called Class Clicks, is aggregated, meaning it can't be
used to identify surfing habits of specific students, or even specific
schools....for $15,000 a year, marketers and Web-site operators can get
monthly reports that detail where kids are going on the Internet, along
with Roper Starch's aggregate estimates of the kids' ages and races."
The Journal noted that, so far, N2H2's only clients for the student
marketing data are BigChalk Inc. and the Defense Department.

N2H2 is widely used in the nation's schools.  According to the Journal,
"Just under half of all schools and libraries use some sort of filtering
software, and N2H2 has 20% of this market, according to International
Data Corp."

"Schoolchildren should not be for sale, nor should they be pawns in any
corporation's marketing plans," Ruskin said.  "N2H2 is trying to turn
the schools into little market research factories."

"The use of N2H2 software is an abusive extension of government power to
enable marketers to spy on unsuspecting schoolchildren," Ruskin said. 
"N2H2's data gathering and surveillance practices are creepy.  It is not
the proper role of the public schools to help corporations or the
Defense Department to obtain information from vulnerable
schoolchildren.  School board members, principals and teachers should
work together to rid the schools of N2H2's prying software."

Following is today's letter from Commercial Alert to Secretary of
Defense Donald H. Rumsfeld.

Dear Secretary Rumsfeld:

Last Friday, the Wall Street Journal reported that the Defense
Department is a client of N2H2 Inc., which uses child-tracking software
to snoop on the Web-browsing of our nation's schoolchildren, and then
sells the data to marketers.

According to the Journal, N2H2's Bess filtering system "knows where the
students go on the Web and how long they spend there....Late last year,
N2H2 began selling its data.  The information, called Class Clicks, is
aggregated, meaning it can't be used to identify surfing habits of
specific students, or even specific schools....for $15,000 a year,
marketers and Web-site operators can get monthly reports that detail
where kids are going on the Internet, along with Roper Starch's
aggregate estimates of the kids' ages and races."

During the Clinton Administration, the Defense Department must have
grown confused about its mission.  It should spy on national security
threats, not our own schoolchildren.  Please straighten this out, and
cut all Defense Department ties to N2H2 immediately.  Thank you.

Sincerely,

Gary Ruskin, Director, Commercial Alert

<-------letter ends here------->

Following is an article from the January 26 edition of the Wall Street
Journal.

Web-Filter Data From Schools Is Put Up for Sale by Company
by Jason Anders

Few companies know more about what children do on the Internet at school
than N2H2 Inc. The company's Web-filtering software, called Bess, is
used by more than 12 million students in kindergarten through 12th
grade, and new federal rules are likely to push the number higher.

Because it typically is installed as a school's gatekeeper to the
Internet, Bess knows where the students go on the Web and how long they
spend there. It also knows when students try to access a site that's on
N2H2's blacklist for being too violent or containing pornography.

The question is whether marketers should get to know students' surfing
habits, too. Late last year, N2H2 began selling its data. The
information, called Class Clicks, is aggregated, meaning it can't be
used to identify surfing habits of specific students, or even specific
schools. But privacy advocates say the sale of children's usage data is
troubling, and they worry that marketers are encroaching on ground that
once was sacred.

"Students just should not be contributing to marketing tools and
subjected to profiling based on how they are using the educational tools
of the Internet," says David Sobel, general counsel at the Electronic
Privacy Information Center in Washington.

N2H2 spokesman Allen Goldblatt counters that schools and parents have no
reason to be concerned. "This is a real nonissue for us," he says. "This
information is so anonymous and vague."

Just under half of all schools and libraries use some sort of filtering
software, and N2H2 has about 20% of this market, according to
International Data Corp., a research firm. The new Children's Internet
Protection Act makes the use of such software a requirement for schools
and libraries that want to obtain money from the federal E-rate program,
which helps schools get on the Internet.

N2H2 says it began tracking students' Internet activities in late 1999.
It figured the data would be useful to teachers and to operators of
educational Web sites. Then, in the summer of 2000, it began looking
into other uses of the data. It soon began talking with New York
marketing firm Roper Starch Worldwide about developing a marketing
product the two could sell.

As a result, for $15,000 a year, marketers and Web-site operators can
get monthly reports that detail where kids are going on the Internet,
along with Roper Starch's aggregate estimates of the kids' ages and
races. At its most specific, N2H2 says, the reports group students into
one of nine U.S. census districts. The company says there is no way for
buyers of the data to figure out who the students are.

"We would never do anything that compromises the trust of the students
or the schools.  To date, we haven't had a single school district that
has asked us to remove it from the sample," says Cory Finnell, director
of analytics for N2H2, which is based in Seattle.

Still, it is unclear how many of N2H2's school clients realize that
their students' Web activities are part of a marketing product. N2H2
says schools were specifically told that the company was collecting the
data in a December 1999 report that was sent to all of the company's
educational clients. But the report was written months before N2H2 first
met with Roper Starch and it doesn't mention any plans to sell the
school traffic data.

Jeff Johnson, who oversees computer operations for the Greendale School
District, a former N2H2 client in Greendale, Wis., says he didn't know
information was being collected for a marketing program. "That's
something I would have a big problem with," he says. "It seems
inappropriate." His school stopped using N2H2's software last fall over
an unrelated issue.

Kent Guske, technology director for Worth County Schools in Sylvester,
Ga., also says he didn't know that N2H2 was selling data. But he
considers the marketing effort benign: "I don't really see why it would
be a concern if it's just general usage data on where kids are going,"
he says.

Congress moved to protect children's online privacy with the Children's
Online Privacy Protection Act of 1998, or Coppa, which took effect in
April 2000. The act was designed, in part, to protect young children
from marketing efforts. But privacy advocates argue that it doesn't go
far enough and note that it doesn't prohibit the kind of data collection
N2H2 is doing. The act, which applies to children younger than 13,
prohibits the collection of personal information that can be used to
identify someone.

For its part, SurfControl PLC, another maker of filtering software and
one of N2H2's competitors, says it doesn't collect data on any of its
users' surfing habits and believes it would be inappropriate to do so.

N2H2 acknowledges the company's software, which often is configured to
act as a "proxy server," collects a wide range of data, just as the
servers of any Internet service provider do. Proxy servers, which act as
gateways for Internet traffic, can log a user's Web activities --
including sites visited, pictures viewed and information submitted in
forms. N2H2 says it has built in safeguards to make sure that only
anonymous aggregate data become part of its marketing effort.

Deborah Pierce, an attorney who specializes in privacy matters for the
Electronic Frontier Foundation, says she is troubled by the amount of
data collected. "The bottom line is to get this data they're selling
they're actually collecting a lot more data on their server logs," she
says.

Robert Belair, a privacy attorney with the Washington firm Mullenholz,
Brimsek & Belair, says N2H2's data collection complies with Coppa. "From
a legal standpoint, it sounds like they're fine. But I always tell my
clients that public relations is a different matter," he says.

So far, very few people have seen the data N2H2 is selling. Despite
discounting the product to $10,000, Roper Starch has sold the product to
only two clients: New York-based education portal BigChalk Inc. and the
Defense Department. (N2H2, which went public in July 1999, has yet to
report a profit.)

BigChalk purchased the data because it wanted a better idea of how it
was stacking up against competitors, says Nan Halperin, vice president
of sales and marketing. She says the company wasn't concerned about the
way the data were being collected. "I don't think the data [are] being
used inappropriately, nor do I think that's a threat," she says.

The Defense Department didn't return telephone calls seeking comment.

<------article ends here------->
WHAT YOU CAN DO TO HELP
Find out if your local public schools use N2H2 Web-filters.  If they do,
then work with your local school board, principal and teachers to get
their child-tracking software out of the schools.


Commercial Alert opposes the excesses of commercialism, advertising and
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<http://www.commercialalert.org/>.

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Gary Ruskin | Commercial Alert 
1611 Connecticut Ave. NW Suite #3A | Washington, DC 20009
Phone: (202) 296-2787 | Fax: (202) 833-2406
http://www.commercialalert.org | mailto:gary@essential.org
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