An investigation is underway into how information collected from smartphone users is being shared by app makers on Apple (NSDQ: AAPL) and Google’s platforms according to Pandora, which disclosed Monday that it received a subpoena from a federal grand jury earlier this year.
Pandora, which unlike many other smartphone app companies is preparing for an initial public offering that requires a more formal level of disclosure, amended its S-1 filing with the Securities and Exchange Commission to inform potential investors of the situation. “… In early 2011, we were 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. While we were informed that we are not a specific target of the investigation, and we believe that similar subpoenas were issued on an industry-wide basis to the publishers of numerous other smartphone applications, we will likely incur legal costs related to compliance with the subpoena, management’s attention could be diverted and there is no guarantee that we will avoid costly litigation,” Pandora wrote in the filing.
No other app makers have stepped forward as of midday Monday, and Apple and Google (NSDQ: GOOG) representatives had no comment when contacted by Bloomberg Business Week. Information sharing is the lifeblood of many an online or mobile business built on the back of advertising, and Pandora is no different, warning potential investors in its S-1 filing that “restrictions on our ability to collect, access and harness listener data, or to use or disclose listener data or any profiles that we develop using such data, would in turn limit our ability to stream personalized music content to our listeners and offer targeted advertising opportunities to our advertising customers, each of which are critical to the success of our business.”