Lawsuit claims Amazon using Alexa to target ads at customers

Driving the news: The lawsuit, filed in U.S. District Court in Seattle last week, seeks certification as a class action that, if approved, potentially could include millions of smart speaker customers as plaintiffs.

• It claims that while Amazon has long denied using Alexa as a proxy for targeted advertising, the company essentially acknowledged it does so in response to a press inquiry about a recent academic research paper that came to the same conclusion.

What they're saying: "Amazon's admission that it does, in fact, use Alexa voice prompts to inform targeted advertising placed by Amazon throughout its vast advertising network is shocking, especially coming after years of repeatedly disavowing any such usage," per the complaint.

• "Amazon’s customers agreed to allow Alexa into their homes for a very specific and limited purpose — responding to and executing voice commands and queries," the suit says. "Nothing in Alexa's terms of service or privacy policy discloses or obtains authorization for usage of their voice recordings for advertising purposes."

Why it matters: Amazon now dominates an ever-growing smart speaker market, owning nearly 70% of the market share with more than 80 million of its devices operating in over 50 million homes, per the latest research by Consumer Intelligence Research Partners.

• Its Alexa speaking assistant also works with other brands of smart speakers.
• If the lawsuit's claims are accurate, tens of millions of American households — some with multiple smart speakers — are vulnerable to unwitting ad targeting through a device voluntarily brought into homes.

The other side: "We do not comment on active litigation," Lisa Levandowski, an Amazon spokesperson, told Axios on Wednesday.

• As noted in the suit, Amazon repeatedly has denied using voice data from Alexa to target ads at customers, including in statements to NBC, the New York Times and The Conversation podcast.

Yes, but: Despite Amazon's denials, academics from the University of Washington and three other universities published a research paper in April concluding otherwise.

• The researchers created personas to use Echo devices and built a framework to measure Amazon’s collection, usage and sharing of interaction data from them.
• They also tracked ads targeted to each persona, concluding that Amazon was “processing voice data to infer user interests” in those ads.

• Researchers further found that "Amazon's inference of advertising interests from users' voice interactions seems to be inconsistent with their public statements."

In response to a report by The Register about the research, an Amazon spokesperson denied the findings, but stated: "if you ask Alexa to order paper towels or to play a song on Amazon Music, the record of that purchase or song play may inform relevant ads shown on Amazon or other sites where Amazon places ads."

• The lawsuit calls that statement a "stunning" admission, but noted Amazon was still "side-stepping" researchers' findings, which identified targeted ads via Alexa interactions that didn't result in a purchase.

Context: The suit names as plaintiffs and potential class representatives James Gray, an Ohio man, and Scott Horton, a Massachusetts resident, both of whom have four Alexa-enabled devices in their homes, per the suit.

• Each man has "been subjected to unauthorized usage" by Amazon "of Alexa-collected voice data to target him with ads on numerous occasions without consent," the suit says.
• The suit cites four causes of action against Amazon, including invasion of privacy, infringement of personal rights and violations of fair dealing in contracts and in Washington's consumer protections law.

Of note: A similar class action lawsuit was filed last year in Illinois.