The leak of customer data from extramarital affairs dating website Ashley Madison could sign the death warrant for the business — mainly because it prides itself on the heightened level of privacy it offers to its customers.
And when I spoke to the company’s boss in May, he made it a point to mention how Ashley Madison was at the forefront of cutting edge privacy technology.
Ashley Madison, owned by parent company Avid Life Media which has a host of other niche dating websites, offered a unique service that allowed customers to pay for all their data to be erased. His company also used a feature that later became central to Snapchat’s disappearing data function, Biderman claimed.
In other words, if you cancelled your account, your details would not be stored on any server or cached anywhere.
The luxury would cost users £15 ($US20) to remove all their information. According to Buzzfeed, the service raked in nearly $US2 million for the website.
However, according to data seen by The Guardian, the deletes may not have happened.
Ashley Madison “retained enough personal data about users to identify them to spouses — as the site’s hackers have claimed — despite offering a paid-for ‘full delete’ service,” according to those who have examined the 10 gigabytes of user information from the July breach.
“We use technology to deliver discretion”
Ashley Madison spent the early part of 2015 trying to get a bank to launch an IPO in London, which was estimated to raise £135 million ($US200 million) to fuel a massive expansion.
In May I spoke to Avid Life Media’s boss Noel Biderman about the impending flotation.
At the time, he told me that the company created the features popularised in popular mobile dating and social media photo apps “years ago” when it was looking to offer “how to have the perfect affair.”
Noel Biderman told Business Insider in a phone interview that while the enormous success of dating apps Tinder and Grindr and photo messaging app Snapchat was “great for the industry,” Ashley Madison is often overlooked for its technological innovations.
“We have always said that we are here to give you the ‘perfect affair’ by using technology to deliver discretion. What Snapchat gives is actually a minor feature of what we have used on our platform for ages and the location-based settings for Tinder or Grindr are, again, just small features of a wider platform we have. We’ve been doing this since 2002,” said Biderman at the time. Snapchat has nearly 200 million users.
Biderman said that his website used similar location-based technology as Grindr, Tinder, and self-deleting technology as Snapchat, but on one big platform. He added that Ashely Madison goes beyond those other app offerings and even wipes location-based history.
“I say good for them for making this central to their apps, it’s great for brand positioning and the industry as a whole but we were far ahead of everyone else on this before with the website and then with the phone application.”
He added that the fact users could choose to wipe out their history at the website was a major feature.
Grindr, launched in 2009, is a dating app which is focused on the gay community which uses location-based GPS to find someone local to hook up with. It has around 10 million users. Tinder, launched in 2012, is another location based dating app that has a gimmick to swipe right if you want to get to know the person in a picture or swipe left if you’re not interested. It has around 50 million users.
Ashley Madison launched its website in 2001 and now has 36 million members in 46 countries. In 2014, it had $US115 million (£76 million) in sales, which is an almost fourfold increase since 2009. Biderman said that revenue is projected to reach over $US150 million (£99 million) over the next year or so at the time of the phone interview.
The London IPO
The scandal is sure to be a blow to Ashley Madison’s prospects. It was already struggling to get an IPO off the ground.
Now, it has to deal with the fallout of the scandal — not just the hacking but also the fact its technology is under tremendous scrutiny.
In July, I spoke to Biderman again to catch up on how the IPO was going. Instead of telling me he found a bookrunner for the float, he admitted that the company was thinking of abandoning the IPO altogether.
“There is no change in securing a bank to lead an IPO but right now we are looking and assessing two different strategies. We can do a straight-up IPO, but since the news of the potential launch was made, we got a lot of attention and this has garnered a range of further options,” said Biderman at the time.
“With the kind of income we generated over the last eight years and if we remain as profitable as we are now over the next eight years, it may be in our current shareholders’ interest to for us to use an investment vehicle to give them set dividends. For example, investing $US1 a year, would give you $US1 in return the following year, rather than investing $US1 and potentially getting $US5 some time down the road.”
Business Insider got in touch with Biderman’s representatives in London and the US but they were not immediately available for an update.