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Microsoft's Porn Mode to Take On Google

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New privacy function targets search leader's advertising.

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Browser wars - continued.

Microsoft's (MSFT) Internet Explorer 8 Web browser is the latest shot in the continuing battle - and it's aimed right at Google's (GOOG) advertising.

Microsoft's new version includes an InPrivate setting -- known in geekdom as "porn mode" -- that allows users to hide their browsing history from others using the same computer. Competitors have similar features, but Microsoft's is more prominently displayed.

Some people may want to permanently set the browser on privacy mode, but there's a trade-off: Such users won't automatically receive all data relevant to their searches, the Financial Times reports.

It's a reasonable bet that people with a fondness for naughty websites will happily make this trade-off. If so, Microsoft's new browser could kick Google's dreams of world domination down the stairs.

Google routinely collects buckets of information from users based on their searches to serve up relevant advertising. If large numbers of people suddenly decide to become privacy nuts in the digital age and click Microsoft's new privacy button, Google's click-through display advertising could take a hit. Google generates about 90% of its revenue from search advertising.

Here's how those fiends at Google operate: Search "goat pictures" and Google helpfully provides a sponsored link urging you to "Buy Goat Pictures Here." Clicking on the link puts money in Google's pocket and takes you to a website selling more stuff than you can imagine, including a reproduction of a poster for silent movie star Buster Keaton in The Goat. (It can be yours for $19.99; frame it for an additional $9.99).

However, Microsoft's new feature wouldn't dent Google's display advertising. Yahoo (YHOO) is frantically re-tooling to play catch-up with Google in search advertising.

Microsoft haters might see the software giant's new Internet Explorer 8 Web browser as penance for Internet Explorer 6. That monstrosity, released in 2001, was a SNAFU even by Microsoft's standards, and created an opening for Firefox.

Insiders say Internet Explorer 7 just looked like a desperate effort to catch up. The current browser appears to be yet another bid to outpace Firefox and Apple's (AAPL) Safari.

The short answer: We'll see. Microsoft now has about 73% of the browser market. Firefox now grabs about 19% and Apple's Safari has about 6%.

But before anyone proclaim Microsoft's Internet Explorer 8 the dawning of a new paradigm (a word that should be banned by local ordinance), I ask you to remember Netscape.

Remember Netscape? In mid-1994, Silicon Graphics (SGIC) founder Jim Clark worked with Marc Andreessen, a whiz kid from the University of Illinois. At Illinois, Andreessen led the development of "Mosaic," a browser that quickly spread beyond academia.

Within 6 months or so, a commercial version of the browser was released as Netscape. It was an instant hit. By the summer of 1995, some pegged Netscape's market share at 80% or better. Windows 95 was released in August 1995.

AOL (TWX) acquired Netscape in 1998 for $4.2 billion, but then announced that it would discontinue development of the browser. Critics say AOL never devoted much effort to Netscape; it had about 0.5% share of the market when the curtain came down.

Some of the key Netscape players spun off, however, to create a little non-profit called Mozilla - the folks who brought you Firefox.

Now, Netscape occupies a special place in the hearts of geekdom - right next to the Apple III.

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