ASSURANCE OF DISCONTINUANCE INTRODUCTION. 1. In March 2002, Yahoo! announced changes in its marketing practices.

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1 ATTORNEY GENERAL OF THE STATE OF NEW YORK INTERNET BUREAU IN THE MATTER OF YAHOO! INC. ASSURANCE OF DISCONTINUANCE Pursuant to the provisions of Executive Law Section 63 subdivision 12 and the General Business Law Article 22-A, ELIOT SPITZER, Attorney General ofthe State of New York, caused an inquiry to be made into certain business practices ofyahoo! Inc. ("Yahoo!"). As a result of such inquiry, the Attorney General determines : INTRODUCTION 1. In March 2002, Yahoo! announced changes in its marketing practices. In response to public reports about these marketing changes the Attorney General commenced an investigation into how the changes would affect Yahoo!'s right and ability to market to its users on Yahoo!'s own behalf and on behalf of third parties. In cooperation with the Attorney General, Yahoo! hereby voluntarily agrees to memorialize in this Assurance of Discontinuance what rights of notice and choice its users shall have with respect to Yahoo!'s marketing program, and to abide by the terms set forth herein.

2 DEFINITIONS 2. "Clear and Conspicuous" shall mean a manner of communicating information to recipients that is readily noticeable, readable, and comprehensible. Factors that will be considered in determining whether information disclosed to recipients pursuant to this Assurance is conveyed "clearly and conspicuously" shall include, but not be limited to, prominence, proximity, absence of distracting elements, and clarity and understanding ofthe text of the document to a reasonable reader. 3. "Shall include" or "including" shall mean, respectively, "shall include but not limited to" or "including but not limited to." 4. "Privacy Policy" shall mean a contract which details privacy practices of a company and defines the terms ofhow the company may use personally identifiable information provided by consumers who use the service. BACKGROUND 5. Yahoo! is a Delaware corporation with its principal place ofbusiness located at 701 First Avenue, Sunnyvale, California, Yahoo! is an online service provider that operates a global network of Internet sites, including the website targeted at U.S. users located at Yahoo! began in 1994 as a single website offering an index to the World Wide Web. Over time,

3 Yahoo! has grown to include a large number of websites under the Yahoo! brand that are linked with one another. The websites targeted at U.S. consumers are referred to together herein as the "Yahoo! Network." 7. Since 1994, Yahoo! has been conducting business in the State ofnew York, pursuant to which it provides services to consumers. 8. In contrast to subscription-based Internet service providers and other leading online companies, Yahoo! historically has allowed consumers to use most parts of the Yahoo! Network for free and without identifying themselves to Yahoo!. 9. Since 1997, Yahoo! also has offered its users the option of registering - i.e., providing certain information about themselves in exchange for a Yahoo! ID. Consumers who have obtained a Yahoo! ID are referred to herein as "Registered Users." Being a Registered User entitles consumers to a free yahoo.com account. It also allows consumers to use certain services that are available only to Registered Users. 10. The registration process to become a Registered User has evolved over time, but generally has included the following elements : (a) consumers filled out an online form where they provided certain information about themselves, and then "clicked" to submit the form ; (b) consumers were asked a single "yes-or-no" question as to whether they wished to receive any marketing communications from Yahoo! (Until March 2002, Yahoo! did not allow

4 users to distinguish between marketing communications sent by Yahoo! on behalf of third parties, on the one hand, and messages from Yahoo! about its own products and services, on the other.) ; (c) the Privacy Policy has always stated, and continues to state, that Yahoo! does not rent or sell its users' personal information, with limited exceptions that are set forth in the policy. 11. Yahoo! estimates that as of April 2002 there were approximately 3.4 million active accounts associated with a New York zip code, and that over time, as to approximately 1.5 million ofthese accounts, the users advised Yahoo! that they did not wish to receive marketing communications, under the format that only allowed for a yes or no answer that indicated the user would receive all marketing messages or none. 12. Between 1997 and March 2002, as Yahoo! evolved, it changed its offerings to consumers in significant ways. Yahoo! significantly expanded the range of its products and services. The features added during this time included Yahoo! Travel in 1997, Yahoo! Shopping (an online mall) in 1998, GeoCities (web page hosting) in 1999, PayDirect (online bill payment) in 2000 and the Launch music service in In all, Yahoo! offered more than 100 distinct products and services by the spring of 2002.

5 13. Large numbers of Registered Users created their Yahoo! accounts at a time when this expanded range of products and services did not exist, and when Yahoo! was principally a search site. ATTORNEY GENERAL'S FINDINGS 14. In March 2002, Yahoo! announced a number of changes to its marketing program. Based on public information and reports concerning those changes, the Attorney General commenced an investigation. That investigation has resulted in the following findings. 15. Yahoo! announced its new marketing preferences program in March The program had three basic elements : (a) Creation ofthe Marketing Preferences page. This page allowed Registered Users to make two kinds of choices that previously were unavailable. First, Registered Users could now make separate choices about whether to accept messages from Yahoo! about Yahoo!'s own products and services as opposed to messages sent by Yahoo! on behalf of third parties. Second, Registered Users could specify by topics what marketing communications they wished to receive. For example, Registered Users could now tell Yahoo! that they wished to receive marketing communications about specific topics such as travel or personal finance, but not sports or job search;

6 (b) Segregating Yahoo!'s marketing communications sent on behalf of third party companies into a separate program called "Yahoo! Delivers". For this program, Yahoo! maintained its Registered Users' original preferences with respect to contacts. That is, if Registered Users had instructed Yahoo! during registration that Yahoo! could not contact them with promotional messages, then Yahoo! would not send those users any Yahoo! Delivers messages even after March 2002 ; and (c) Segregating Yahoo!'s marketing communications to users about its own products and services into a separate program, known internally as "Yahoo! Direct." Yahoo! sent notice of the new marketing program to all Registered Users. In the notice to Registered Users who had chosen not to receive marketing communications under the previous marketing program, Yahoo! stated that (i) after sixty days they would begin to receive Yahoo! Direct messages, and (ii) they could decline to receive such messages, in whole or in part, by visiting the new "Marketing Preferences" page. 16. Yahoo!'s notice to Registered Users advised that Yahoo! would not implement the new marketing communications program for sixty (60) days from the date ofthe notice. During the 60-day notice period, and before any Yahoo! Direct marketing communications actually were sent to any Registered Users who previously had informed Yahoo! that they did not wish to receive marketing communications, the Attorney General initiated this investigation ofyahoo!'s marketing practices. Pending the outcome of the

7 investigation; Yahoo! has voluntarily suspended the implementation of the Yahoo! Direct program as to users whose preference under the old marketing program was not to be contacted. 17. IT NOW APPEARS that Yahoo! is willing to enter into this Assurance of Discontinuance without admitting to the Attorney General's findings or to any violation of law, and that the Attorney General is willing to accept this Assurance of Discontinuance pursuant to Executive Law Section 63(15) in lieu of commencing a statutory proceeding. AGREEMENT 18. IT IS HEREBY AGREED by and between the parties that this Assurance of Discontinuance shall be binding on, and apply to, Yahoo! and any subsidiary, division, affiliate or other entity through which Yahoo! may now or hereafter act with respect to the Yahoo! Network, as well as any successors in interest. IT IS FURTHER UNDERSTOOD AND AGREED that Yahoo! must, before implementing the changes it announced in March 2002 (as described in paragraph 15 above) and thus directing marketing communications to Registered Users who previously had declined to receive such contacts from Yahoo! under the pre-march 2002 program, first give such users additional prior notice that they will receive such communications. This notice

8 shall be delivered by to each such Registered User at least thirty (30) days prior to the implementation of the Yahoo! Direct program, and shall clearly and conspicuously inform them of (a) the existence, nature and new effective date ofthe Yahoo! Direct program; (b) the standard methods available to edit their Marketing Preferences or delete their Yahoo! account ; and (c) the changes from the previous marketing program. 20. IT IS FURTHER UNDERSTOOD AND AGREED that, as to any Registered User who has supplied his or her telephone number to Yahoo! as part of their account information and who declined to receive marketing communications from Yahoo! under the previous marketing program, Yahoo! shall not telemarket to any such Registered User at the number the user supplied to Yahoo! without the user's affirmative consent. 21. IT IS FURTHER UNDERSTOOD AND AGREED that Yahoo! shall continue to provide a clear and conspicuous explanation of the Marketing Preferences program on the Marketing Preferences page. The notice provided under this paragraph shall be maintained for not less than sixty (60) days from the execution of this Agreement. 22. IT IS FURTHER UNDERSTOOD AND AGREED that within the text of any Yahoo! Direct or Yahoo! Delivers message sent to Registered Users as a result of their individual Marketing Preferences, Yahoo! shall include a clear and conspicuous hypertext link directly to an "unsubscribe" page where the Registered User may revise the

9 Marketing Preference that generated the . The unsubscribe page shall also include clear and conspicuous hypertext links directly to : (a) the Yahoo! Network's Privacy Policy; (b) the Yahoo! Network's Terms of Service ; and (c) a Marketing Preferences page where the Registered User may review and modify the remainder ofher Marketing Preferences to opt-out ofreceiving marketing solicitations under the Marketing Preferences program. 23. IT IS FURTHER UNDERSTOOD AND AGREED that should exigent and exceptional circumstances arise making it impossible to provide the notices specified in this Assurance, Yahoo! shall provide such notice as is reasonably practicable based on the facts and circumstances and shall notify the Attorney General ofthe circumstances within ten (10) business days of discovery of such circumstances. In such an instance, the Attorney General reserves all rights to take legal action, including (without limitation) enforcement of the terms of this Assurance. 24. IT IS FURTHER UNDERSTOOD AND AGREED that Yahoo!, by certified check, shall within ten (10) days of executing this Assurance, pay the sum of Seventy Five Thousand Dollars ($75,000) to the New York State Department of Law, as and for costs of this investigation. 25. IT IS FURTHER UNDERSTOOD AND AGREED that within one hundred and eighty (180) days of the execution ofthis Assurance, Yahoo! shall file with the

10 Attorney General an affidavit, completed by an officer of Yahoo! knowledgeable of Yahoo!'s business practices, describing Yahoo!'s compliance with all the terms of this Assurance, along with copies of all relevant documentation. 26. IT IS FURTHER UNDERSTOOD AND AGREED that nothing in this Assurance shall be construed to deprive any consumer or other person or entity of any private right under law. 27. IT IS FURTHER UNDERSTOOD AND AGREED that the acceptance of this Assurance of Discontinuance by the Attorney General ofthe State of New York shall not be deemed or construed as an approval by the Attorney General of any of Yahoo!'s activities or practices, past or present, and Yahoo! will not make any representations to the contrary. 28. IT IS FURTHER UNDERSTOOD AND AGREED that nothing contained herein shall be construed as relieving Yahoo! of the obligation to comply with all state and federal laws, regulations or rules, nor shall any of the provisions of this Assurance be deemed permission to engage in any act or practice prohibited by such law, regulation or rule. 29. IT IS FURTHER UNDERSTOOD AND AGREED that in order to assure compliance with this Assurance, Yahoo! shall keep, for a period of twenty-four (24) months from the execution ofthis Assurance, copies of each , correspondence

11 (regardless of the method of delivery), or other consumer directed communication (including web site postings) that is subject to the terms of this Assurance. Multiple versions of such e- mails or correspondence need not be maintained, if they differ only in terms ofthe recipient. Yahoo! shall make such records referred to in this paragraph available for review by the Attorney General, upon request by the Attorney General, and shall provide to the Attorney General copies of these and such other documents as the Attorney General shall from time to time determine are necessary to assure compliance with this Assurance.

12 WHEREFORE the following signatures are affixed hereto this day of September YAHOO! INC. By : An Officer Authorized to Sign on Behalf of Yahoo! Inc. ELIOT SPITZER Attorney General of the State ofnew York 120 Broadway New York, New York wa w~ e 4 ~ANZe( lzaj,~,~sw~z~~. Don M. Tellock Assistant Attorney General INTERNET BUREAU (212) Kenneth M. Dreifach Assistant Attorney General In Charge INTERNET BUREAU (212)