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Microsoft Battles Major Advertisers Over 'Do Not Track' Browser Feature

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It's Goliath vs. a bunch of other Goliaths in an online privacy war.

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MINYANVILLE ORIGINAL In the world of Internet browsers, Microsoft's (NASDAQ:MSFT) Internet Explorer is often seen as the competition-crushing Goliath who has nearly obliterated Netscape and is now trying to do the same to Mozilla's Firefox. But in the realm of online advertising, it appears the Redmond, Washington-based company has found a new role: A fearless advocate for defenseless consumers.

In an online age where data trackers follow every movement made by people surfing the Web and sell the information for targeted advertising purposes, the upcoming Internet Explorer 10 has chosen to offer a "Do Not Track" option -- which would prevent companies from collecting online information -- as a default browser setting, rather than making consumers have to opt in on the feature.

Currently, Mozilla's Firefox and Apple's (NASDAQ:AAPL) Safari both have the Do Not Track capability as an opt-in feature. Google (NASDAQ:GOOG), the other browser titan, will add Do Not Track to its Chrome browser by the year's end, though it is unclear if the company will present it as the default option.

Unsurprisingly, this decision does not sit well with advertisers. Advertising industry groups such as the Association of National Advertisers, or ANA, have launched fervent campaigns to prevent browsers from making Do Not Track an opt-out feature.

A few weeks ago, the ANA sent an open letter to Microsoft CEO Steve Ballmer saying that Microsoft's move will "undercut the effectiveness of our members' advertising and, as a result, drastically damage the online experience by reducing the Internet content and offerings that such advertising supports. This result will harm consumers, hurt competition, and undermine American innovation and leadership in the Internet economy."

The letter, signed by a host of major companies including AT&T (NYSE:T), Bank of America (NYSE:BAC), Coca-Cola (NYSE:KO), Dell (NASDAQ:DELL), McDonald's (NYSE:MCD), Toyota (NYSE:TM), and Wal-Mart (NYSE:WMT), added, "Microsoft's action is wrong. The entire media ecosystem has condemned this action…In the face of this opposition and the reality of the harm that your actions could create, it is time to realign with the broader business community by providing choice through a default of 'off' on your browser's 'Do Not Track' setting."

The New York Times explains why advertisers are so worked up over the Do Not Track technology:

The advent of Do Not Track threatens the barter system wherein consumers allow sites and third-party ad networks to collect information about their online activities in exchange for open access to maps, e-mail, games, music, social networks, and whatnot. Marketers have been fighting to preserve this arrangement, saying that collecting consumer data powers effective advertising tailored to a user's tastes. In turn, according to this argument, those tailored ads enable smaller sites to thrive and provide rich content.

Advertisers believe that Microsoft is crossing the line because data collectors are actually not legally obligated to honor browser Do Not Track requests. They only do it so long as long as the Do Not Track function remains an opt-in setting. The Digital Advertising Alliance, an industry consortium, has said that it will waive the requirement of its members to honor Internet Explorer 10's Do Not Track requests.

Another industry group, the Direct Marketing Association, also argues that tracking online activity actually benefits consumers, saying, "Consumers love getting what they want-information, products, benefits, upgrades-when they want it… There is no evidence that data-driven marketing harms consumers in any way," notes IEEE Spectrum.

Many advertisers say that an under-publicized effect of the Do Not Track feature is that consumers' online browsing experience will change when advertisers and publishers cannot track data anonymously.

"One of the things lost in this debate is consumers will have a materially different experience online. And I think we've got to champion that more loudly," Wendy Clark, senior VP-integrated marketing communications and capabilities at Coca-Cola, told Advertising Age, though she did not specify how the user experience would be different.

For its part, Microsoft is not standing down, even in the face of intense pressure to do so. In an emailed statement, Microsoft Chief Privacy Officer Brendon Lynch pointed out that a recent company survey of US and European Web users found that 75% of respondents preferred for Do Not Track to be turned on in Internet Explorer's default setting. He also said that Microsoft was committed "to privacy by design and putting people first... We also believe that targeted advertising can be beneficial to both consumers and businesses. As such, we will continue to work toward an industry-wide definition of tracking protection."

Twitter: @sterlingwong
No positions in stocks mentioned.
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