Pandora says regulators are scrutinizing privacy and data security on mobile apps

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Pandora Media, maker of the popular Internet radio service, said it had been served with with a subpoena from a federal grand jury that is probing how personal data are shared among smartphone applications.

The disclosure, first reported by Bloomberg, came in documents that Pandora filed Monday with the Securities and Exchange Commission. The filing, in the form of an amendment to the company’s plans for an initial public offering, said the grand jury had been convened to ‘investigate the information sharing processes of certain popular applications that run on the Apple and Android mobile platforms.’

The Oakland, Calif., company said it was told that it was ‘not a specific target of the investigation,’ and that ‘similar subpoenas were issued on an industrywide basis to the publishers of numerous other smartphone applications.’

Pandora and other apps collect information on users -- including their locations, preferences and socio-economic backgrounds -- to help them sell products and send targeted ads.

Although such practices are commonplace, they may be called into question as federal regulators and lawmakers voice privacy concerns over how such information is tracked and shared. Here’s a paragraph in the filing about how Pandora could be affected:

In particular, government regulators have proposed “do not track” mechanisms, and requirements that users affirmatively “opt-in” to certain types of data collection that, if enacted into law or adopted by self-regulatory bodies or as part of industry standards, could significantly hinder our ability to collect and use data relating to listeners. 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.

Regulators are starting to devote more attention to mobile devices and the applications that run on them as consumers increasingly access the Internet through smartphones and tablets. Pandora, for example, has 80 million listeners, the majority of whom use the streaming music service via cellphones such as the iPhone.

-- Alex Pham