Even as Congress considers new cyber-privacy legislation, the Department of Justice appears to be conducting a criminal investigation of privacy violations based on existing law. This underscores the looming confrontation between government and a wild-and-woolly world of wireless apps. As the Wall Street Journal’s privacy series has shown, a multi-billion dollar industry has been built on a business model that may not withstand legal and legislative scrutiny.

Mobile-App Makers Face U.S. Privacy Investigation

Federal prosecutors in New Jersey are investigating whether numerous smartphone applications illegally obtained or transmitted information about their users without proper disclosures, according to a person familiar with the matter.

The criminal investigation is examining whether the app makers fully described to users the types of data they collected and why they needed the information-such as a user’s location or a unique identifier for the phone-the person familiar with the matter said. Collecting information about a user without proper notice or authorization could violate a federal computer-fraud law.

Online music service Pandora Media Inc. said Monday it received a subpoena related to a federal grand-jury investigation of information-sharing practices by smartphone applications.

Pandora disclosed the subpoena, issued “in early 2011,” in a Securities and Exchange Commission filing. The Oakland, Calif., company said it had been informed it is “not a specific target of the investigation.” Pandora said it believed similar subpoenas had been issued “on an industry-wide basis to the publishers of numerous other smartphone applications.”

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