Mobile ad tech firm InMobi, one of the earliest Indian unicorns, received a major blow as the US Federal Trade Commission asked the company to pay $950,000 in civil penalties on charges that it deceptively tracked the locations of hundreds of millions of consumers without their knowledge. InMobi acknowledged the violation, calling it a ‘technical error’.

The FTC alleged that InMobi’s advertising software tracked consumers’ locations whether or not the apps using InMobi’s software asked for consumers’ permission to do so, and even when consumers had denied permission to access their location information.

Experts believe the fine is too small for InMobi to worry about, but at the same time will set the benchmark for Indian companies, which often ignore privacy policies in their products.

The FTC alleged that InMobi also violated the Children’s Online Privacy Protection Act (COPPA) by collecting this information from apps that were clearly directed at children, in spite of promising that it did not do so

“No Indian company has seriously cared about privacy. I’m glad that Indian companies have to suddenly come up to global privacy norms in their products,” said Mahesh Murthy, founder of Seedfund and a start-up investor.

“With best intentions to adhere to COPPA requirements, InMobi implemented a process to exclude any publisher’s site or app identified as a COPPA app from interest-based, behavioural advertising. During the investigation by FTC, InMobi discovered that there was a technical error at InMobi’s end that led to the process not being correctly implemented in all cases. InMobi promptly notified the FTC of this issue as soon as it was discovered and has made it clear from the outset that this was by no means deliberate,” an InMobi spokesperson said.

The settlement will require InMobi to institute a comprehensive privacy programme.

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