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Online Ad Industry Takes Aim at Microsoft in Congressional Hearing

The DAA Tries to Hold Together Consensus as Negotiations Get Testy

By Published on . 2

The online ad industry tried once again in a hearing Thursday to convince Congress its self-regulation plan is working, even as one of its most important members, Microsoft, has broken ranks.

The privacy icon
The privacy icon

Bob Liodice, president and CEO of the Association of National Advertisers, testified before the Senate Commerce Committee to give a raft of updated stats on the privacy icon that lets consumers opt out of tracking: a trillion ads with the icon served per month, a million consumer opt-outs since January 2011 and hundreds of companies licensing the icon.

But Mozilla told the committee that industry efforts aren't going far enough. "The public is increasingly uneasy about the extent to which their online lives are invisibly profiled, analyzed, packaged, sold and reused to personalize advertising, content and services," said Alex Fowler, chief privacy officer for Mozilla, in comments submitted to the committee.

Microsoft, maker of the world's most ubiquitous web browser, has thrown the privacy debate into stark relief by announcing that the next version of Internet Explorer will ship the Do Not Track option activated by default, walking away from the consensus that had been reached between the online ad industry and privacy advocates. Microsoft's move has emboldened privacy advocates seeking to overturn the internet's status quo, which tracks consumers unless otherwise instructed.

Mr. Liodice let the committee know that the Digital Advertising Alliance, a consortium of groups representing marketers and advertisers, opposes the move. "The DAA is concerned that this unilateral decision by one browser maker may ultimately narrow the scope of consumer choice, undercut thriving business models, and reduce the availability and diversity of Internet products and services that millions of American consumers currently enjoy and use at no charge," he said in prepared testimony.

Without singling out Microsoft by name, FTC Chairman Jon Leibowitz seemed to side with the Digital Advertising Alliance by saying consumers should be able to chose a Do Not Track option if they want it. "My position is clear: I support an easy, persistent opt out on third-party tracking that limits collection with a few exceptions, such as security," he said, in a statement provided to Advertising Age.

All sides consider the process at a critical stage. The Federal Trade Commission are looking to a little-known working group within World Wide Web Consortium (W3C) to come up with a framework for how websites and advertisers should handle Do Not Track instructions from a web browser. Chairman Liebowitz said he expects this process to conclude "by the end of the year."

The hearing today follows three days of contentious meetings by the W3C working group in Seattle last week. Online ad companies that rely on third-party tracking, meanwhile, complain that they have no voice in the group, which consists predominantly of academics and first-party data owners such as Yahoo, Apple and Facebook. "Decisions about the future of online advertising are being made in a conference room full of academics and first-party data owners," said Eric Wheeler, CEO of 33Across, who attended the group's meetings last week, but only as an observer.

Aleecia McDonald, co-chair of the working group, told Ad Age its intent is not to harm business or advertising. "The hope for Do Not Track and the reason I invested a year of my life is to improve privacy for consumers without doing harm to the internet ecosystem," she said.

In one example of the group's sensitivity to business, Ms. McDonald said the group decided that the standards would allow frequency capping under Do Not Track. That means that even if a user says they don't want to be tracked, advertisers could collect enough information to make sure users weren't inundated with the same ad, an outcome the industry has said would be the result of blocking data collection.

As it stands, the group considers Microsoft's approach to be "non-compliant" with their standards. The European Commission and two members of Congress, Joe Barton (R-Texas) and Ed Markey (D-Mass.) sent letters supporting Microsoft and asking the working group to honor Microsoft's approach.

FTC Commissioner Thomas Rosch argued in a letter to the group that an automatic opt-out of tracking means "Microsoft, not consumers, will be exercising choice as to what signal the browser will send."

The irony of all of this is that in a heated election year, political campaigns are using ever more sophisticated -- some might say invasive -- techniques to target likely voters within congressional districts. In that sense the debate over targeting is a political issue that hits close to home for everyone.

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