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TOUGH TIMES

The US has fined a mobile advertising firm for tracking the location of hundreds of millions of people

Itika Sharma Punit
By Itika Sharma Punit

Co-editor, Quartz India

Mobile advertising firm InMobi, which has been struggling with slowing growth and senior-level attrition, has received another major blow.

US consumer protection regulator has fined InMobi $950,000 (Rs6.39 crore) for privacy breaches that the company said was the inadvertent result of  a technical glitch.

“InMobi tracked the locations of hundreds of millions of consumers, including children, without their consent, in many cases totally ignoring consumers’ express privacy preferences,” Jessica Rich, director of the consumer protection bureau at the US Federal Trade Commission (FTC) said in a statement from the agency on June 22. “This settlement ensures that InMobi will honor consumers’ privacy choices in the future, and will be held accountable for keeping their privacy promises.”

InMobi, which is registered in Singapore has its headquarters in Bengaluru, India, violated the US Children’s Online Privacy Protection Act (COPPA) by collecting information from apps that were clearly directed at children, even when it was not authorized to do so, FTC said.

“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,” the company said in a statement today (June 23). “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 way means deliberate.”

Besides the fine, InMobi will have to establish a comprehensive privacy program, which will be independently audited every two years for the next 20 years.

The FTC originally fined InMobi $4 million, but said it reduced the penalty “based on the company’s financial condition.”

Reversal of fortunes

InMobi was India’s first privately held software startup valued at over $1 billion, making it the country’s first unicorn.

It was founded in 2007 by four alumni of the Indian Institutes of Technology (IIT)—Naveen Tewari, Mohit Saxena, Abhay Singhal, and Amit Gupta—and is backed by marquee investors like Japan’s SoftBank and Kleiner Perkins Caufield & Byers.

The company is among the top mobile advertising firms globally, and closely competes with Google and Facebook in the space. According to its website, InMobi reaches over 1.5 billion unique mobile devices worldwide.

But the company has lost its unicorn title—it is reportedly valued around $800 million now—and it has been struggling to grow its business. In April, the company reportedly laid off around 10% of its staff. Its senior management has seen at least a dozen top-level exits, including that of CFO Manish Dugar, VP of engineering Naresh Agarwal, and VP of finance Ravikiran Vadapally.

In August 2015, inMobi raised $60 million in debt from a consortium of lenders led by Tennenbaum Capital Partners; $40 million of the money went to pay off an older loan.

CEO Naveen Tewari has denied rumors that InMobi would be acquired by another, bigger technology firm such as Google or Microsoft, and has said he was targeting an IPO for InMobi.

But with so much going against the company, going public might not be an option anytime soon.

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