Microsoft charts own path on privacy

The next version of Internet Explorer will make "do not track" the default.
The next version of Internet Explorer will make "do not track" the default.
Posted: August 03, 2012

When Microsoft Corp. unveils a new version of its Web browser, users will be able to traverse sites as always, but with one significant difference: The company plans to make "do not track" the default setting.

That means Internet Explorer 10, expected to launch in the fall, will automatically curtail the personal information garnered as users surf - data shared by third-party companies to serve up targeted advertising.

The move puts Microsoft out in front of a process to set new Internet privacy standards - and puts it at odds with the $31 billion online advertising industry.

"Targeted advertising sells for 21/2 times as much as nontargeted advertising. It's very effective," said Mike Zaneis, senior vice president and general counsel for the Interactive Advertising Bureau. "When a browser like Microsoft comes in and sets [do not track] by default, they just gave everybody a 60 percent-off coupon for our product. We can't survive in that world."

Facing increasing pressure to get ahead of potentially more restrictive legislation, the industry has been struggling to reach consensus for an online privacy standard. In 2011, the World Wide Web Consortium, which sets Internet protocols, put together a working group consisting of companies, privacy advocates, and experts that met for the fifth time in June at Microsoft headquarters in Bellevue, Wash.

Some participants said the group should be able to work out a standard privacy policy by the end of the year, but schisms remain. One thing most agree upon is that making "do not track" a default setting will not be part of their final recommendations. Microsoft's proposed default setting bucks the slowly building momentum for an "opt-out" solution.

"It seems clear to me that the Microsoft position, while it may be more protective of consumer privacy, is not a consensus position within the industry," said Federal Trade Commission Chairman Jon Leibowitz.

"The marketplace needs to decide this, and we're letting them," Leibowitz said. "We have not proffered a proposal, other than calling for a 'do not track' option that would be an opt-out with limits on collection, with certain exceptions."

Efforts to develop an online privacy standard have failed to keep pace with technology, which has fueled explosive growth in tracking and targeting Web users with "interest-based" advertising.

A report issued in June by Krux Digital showed data collection was up 400 percent year over year, with an average of 50 collection events per page view. Much of that growth comes from online media exchanges, which use real-time bidding platforms to sell targeted ads to Web users.

Real-time bidding, a segment that barely existed three years ago, is on pace to represent more than a quarter of all U.S. digital display advertising spending by 2015, said Gordon McLeod, president of Krux, a two-year-old data-management company.

"What a consumer benefits from with having their behavior followed is having things that are relevant to them coming up in their advertising experience," said Jason Wadler, executive vice president of the Evanston, Ill.-based Leapfrog Online, a direct-response marketing company.

Tracking has nonetheless raised concern among privacy advocates and regulators.

Said Jeffrey Chester, a member of the industry group studying the issue and executive director of the Center for Digital Democracy: "Companies are able to identify you by race, by income, by health concerns. There's a lot of sensitive data out there that an individual should have more control of. Right now, an individual has no control."

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