Microsoft is sticking with a decision to make it harder to track users online behavior, earning plaudits from privacy groups but drawing fire from the advertisers that its money-losing Web unit needs most.
Despite months of criticism that the new tools cut off valuable customer-targeting information, Microsoft has no plans to change the automatic setting in its newest Internet Explorer browser that tells websites not to track user behavior, General Counsel Brad Smith said.
We crossed the Rubicon and are completely comfortable being on other side of the river, he said. We have no intention of going back and have no intention of engaging in discussion on that possibility.
The Do Not Track feature has been at the center of privacy debates over browsing data and how websites and marketers use it to make money.
At stake is a $31.7 billion U.S. Internet ad market, much of it generated by ads tailored to user behavior, that last year grew 22 percent, according to the Interactive Advertising Bureau.
Now Microsoft, whose banner ad business was already losing market share to Facebook and Google, is being criticized by trade groups and facing opposition from advertisers and even partners like Yahoo that say they will ignore privacy signals transmitted by Internet Explorer 10.
Advertisers have invested a lot in their ad platforms, and the Achilles heel is the consumers arent aware that their data is being bought and sold, said Anthony Mullen, an analyst at Forrester Research. That being exposed, which is what this Microsoft initiative does, is healthy, but I can see why the ad industry is nervous.
Smith said Microsoft wants to talk with advertisers and standards bodies to assuage some concerns.
In May, Microsoft surprised privacy advocates and some of its own managers by saying its Internet Explorer 10 browser, the version included in the new Windows 8, would automatically turn on a signal that tells advertisers not to follow user behavior. Other browsers turn off the Do Not Track signal, so users must choose to turn it on. In Explorer, users can choose to enable tracking.
Association of National Advertisers President and CEO Bob Liodice said his group has written to Microsoft to complain about the decision to turn on the signal by default, even after Microsoft made the setting clearer to users.
The groups board includes members from Coca-Cola, Wal-Mart Stores, Unilever and Intel.
Microsofts Smith said the company is willing to discuss tweaks and that he wants the group working on Do Not Track to set up an easy way for trusted advertisers to gain user consent to be followed.