Every Move You Make

AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Every breath you take, And every move you make, Every bond you break, every step you take, I'll be watching you.”  

The lyrics to "Every Breath You Take" by The Police, or as I call it The Stalker Song, take on new meaning now that Verizon joins the ever growing list of companies that want to watch your every move in order to target advertising.  But Verizon could actually watch your every move. On May 26, 2011 (but just published on Nov. 29), Verizon Communications (NYSE: VZ) submitted a patent filing for a set top box that can tell what you’re doing on the sofa, in bed, wherever you watch TV and then can stream advertising based on whatever it is you’re doing. The possibilities are mind boggling and extremely ”pervy” as my daughter replied when I told her about it.

Every Move You Make

Reading the patent description for the prospective device, a DVR, the language gets more “spook-y” as in spying spooks.  An “exemplary system,” they call it, would have thermal sensors, cameras, microphone and laser detection in order to detect “ ambient actions.” In language worthy of the CIA, the Verizon patent filing reads in part:

[0021] To illustrate, detection facility 104 may detect that a user is singing or humming a song. Using any suitable signal processing heuristic, detection facility 104 may identify a name, genre, and/or type of the song. Based on this information, detection facility 104 may determine that the user is in a particular mood. For example, the user may be singing or humming a generally "happy" song. In response, detection facility 104 may determine that the user is in a cheerful mood. Accordingly, one or more advertisements may be selected for presentation to the user that are configured to target happy people."

If they’re listening to Kurt Cobain will they get a PSA for a suicide hotline?  What ad do you get if you’re listening to “Every Breath YouTake,” a Verizon commercial? The proposed device could tell whether you were sleeping, dancing, and (I’m hinting darkly here) much more. While I’m no conspiracy theorist it isn’t a quantum leap to imagine more nefarious and sinister purposes especially in the wrong hands and the precedent of such a device will certainly keep privacy lawyers up at night.

My questions aren’t so much who will pay for the device (likely the advertisers) but who would possibly want it in their home? And why would Verizon be willing to endure the firestorm of negative PR? Could this be a game changer for advertisers and Verizon?

Expectations of Privacy

While most people realize they have no expectation of privacy in public nor at the workplace, the privacy of the home is time-honored in law and custom. CCTV cameras are in place in most major metropolitan areas. However, for years advertisers have been making inroads online, at stores, etc. Target (NYSE: TGT) was a pioneer in targeted advertising with data crunching on its customers’ purchases allowing them to capitalize on upcoming life events such as a pregnancy or a wedding and then sending tailored email or snail mail. In an interesting aside Target executive VP Kathryn A. Tesija was elected to the Verizon board effective immediately.

Certainly, Amazon was an early adopter with its ”if you like that, you might also like this” recommendations. People have no problem with that and many other retailers have adopted similar strategies. Certainly Facebook (NASDAQ: FB) and Google (NASDAQ: GOOG) have targeted ads, such as the new Facebook Gift button and targeted search. There was a huge outcry at first over Google earth and privacy concerns. Facebook has done Google one further and its facial recognition technology that is supposedly in aid of “tagging” your friends has set another dangerous precedent. In a 2011 PC World article writer Sarah Jacobbson Purewal goes into detail exactly why it’s “creepy” and offers suggestions on how to opt out. As time goes on our expectation of privacy anywhere dwindles.

Does Verizon Need This?

I suppose Verizon shareholders would applaud the company’s initiative and innovation. So would law enforcement and the criminal element. As this patent goes forward Congressional committees and pundits will get into the act as well as the FCC. Fellow Fool Rich Duprey shares my concerns here.

It seems Verizon wants to create a Brave New World of advertising with its customers as guinea pigs. Verizon has a good yield of 4.60% but a rather pricey P/E of 41.04 and certainly is a leader in telecom. It’s actually a stock that is a good long term hold, in my opinion. However, this filing is like when a stock rises due to layoffs, it seems like a good thing in the short term, but eventually when the company is unable to deliver due to short staffing it blows up in their face.

On the other hand, advertisers will likely line up around the block to purchase such individualized commercials. For Verizon shareholders it would turn Verizon into a momentum name instead of a value telecom.

So What Now?

While there’s still little information about any time frame on a roll-out, I think conservatively one could expect it no sooner than a year from now. Until then Verizon is a dividend machine, a concept I like a whole lot better than the set top box. Meanwhile, I’d love to see Foolish comments on what they might call it; the PI box as in Personal Intelligence or Privacy Invader or Peeping Inside.

 


leglamp has no positions in the stocks mentioned above. The Motley Fool owns shares of Facebook and Google and has the following options: long JAN 2014 $20.00 calls on Facebook. Motley Fool newsletter services recommend Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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