Feds Probe Mobile App Privacy

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Federal prosecutors in New Jersey are investigating how mobile apps use personal data, according to an unnamed source cited in a story by the Wall Street Journal.

A spokesperson for the Office of the U.S. Attorney in New Jersey declined to comment, citing a policy of not discussing any ongoing investigation.

But on Monday, Pandora, an online music service that distributes mobile music apps, confirmed that earlier this year it had been "served with a subpoena to produce documents in connection with a federal grand jury, which we believe was convened to investigate the information sharing processes of certain popular applications that run on the Apple and Android mobile platforms."

Pandora revealed that it had received the subpoena in a financial filing with the SEC. The company noted that while it was not a specific target in the investigation, it could nonetheless incur costs to comply with the subpoena and might be dragged into litigation.

The revelation follows a series of reports by the Wall Street Journal about online privacy. In October, the paper found that the 10 most popular Facebook apps were sending Facebook UIDs (user IDs) to at least 25 data collection and advertising firms. In December, it found that 56 out of 101 popular smartphone apps transmitted the phone's unique device ID number without consent and that almost as many transmitted location data.

These findings have piqued the interested of regulators at the Federal Trade Commission and the Department of Justice and have prompted at least one lawsuit already.

The Federal Trade Commission has been backing a do-not-track proposal and legislators like Senator Jay Rockefeller say that basic privacy rules are necessary. In all likelihood, the era of self-regulation for mobile and online apps will soon end.

While privacy rules may provide a framework to punish those acting in bad faith, they're not likely to ensure individual privacy. Without a complete source code review by a third-party -- something that's not likely to happen -- it's relatively easy for an ill-intentioned developer to spirit information out of a user's phone. A simple method would be to cache sensitive data and transmit it, perhaps in encrypted or obfuscated form, a month or two after installation.

Even with a mobile operating system like Android, which requires users to authorize network access in apps, the fundamental problem is that personal and financial data be used both legitimately and illegitimately and it's not always possible to divine intent from raw data.