Free Phone Service Listens In, Tailors Ads

In much the same way that Gmail scans emails to push relevant advertising, a California start-up is using voice-recognition software to translate the strategy to Internet phone calls. Puddingmedia offers free phone service if customers allow eavesdropping on their conversations, the AP reports. The data isn't recorded, but privacy advocates and bloggers are up in arms.

Puddingmedia plans to license its software to online call providers, but it already appears to need some work: A conversation about restaurants can yield ads about social work due to glitches in the software. Blogger Henry Blodget predicts the model will flop because "users will be absolutely freaked out by the idea." (More technology stories.)