But Microsoft's new browser will treat all users like they have
already opted out unless they say otherwise, a feature that could
put the web-surfing behavior of millions of people off-limits to
websites and marketers that honor that designation.
Some of the biggest ad holding companies have reached out to
Microsoft this month to make their case against the do-not-track
default. WPP Chief Executive Martin Sorrell wrote Microsoft CEO
Steve Ballmer last week and dispatched WPP's top digital executive,
Mark Read, to meet with Microsoft corporate VP-advertising and
online Frank Holland over the issue, according to executives
familiar with the situation.
High-level Publicis execs including Vivaki CEO Jack Klues have
reached out to Microsoft about the issue as well. Both WPP and
Publicis are big buyers of Microsoft ad inventory and handle
Microsoft advertising business.
Over the years, the Windows side of Microsoft has considering
making do-not-track a default feature of its browser. The last time
was in 2008, when Mr. Ballmer asked Chief Strategy Officer Craig
Mundie and General Counsel Brad Smith to decide what was best for
Microsoft: a browser with privacy built in that might appeal to
consumers or the ad ecosystem that fuels MSN, Atlas and the Online
Services Division. They ruled on the side of the advertising.
But this time Microsoft has shown no sign of backing down. "We
ultimately concluded that the appropriate privacy-friendly default
for DNT in IE10 is 'on,'" Microsoft Chief Privacy Officer Brendon
Lynch wrote in a blog post. Microsoft declined to comment for this
On Wednesday, the World Wide Web Consortium is convening what
promises to be a contentious meeting at Microsoft to determine
whether IE 10 will get the group's seal of approval. If the group
decides to give its blessing, it will also have to come up with
standards for websites to follow when they're visited via browsers
with an automatic DNT beacon. Meanwhile, a patent challenge on the
automatic opt-out could delay the process altogether.
The initial analysis on Microsoft's DNT browser was that it is a
scorched-earth tactic aimed at harming one of Microsoft's biggest
competitors, ad-reliant Google. Advertising is Google's principal
business, not a money-losing sideshow like it is at Microsoft.
Google specializes in ad- supported services that compete with
Microsoft, such as Gmail and Google Docs, while Microsoft
specializes in getting people to pay for things directly, such as
Windows and Xbox Live.
There's no doubt that if IE 10 gains significant share it will
directly affect some of Google's businesses, such as Admeld, its
AdEx ad exchange and the demand-side platform once known as Invite
Media, not to mention a great many startups in the online ad ecosystem. But as
WPP pointed out in that letter to Mr. Ballmer, Google could
actually be helped by do-not-track; it will affect mostly
performance-based display advertisers who bid for ads across the
web using data. If that data can't be collected because of
do-not-track browser settings, those advertisers will likely flee
back to search, which more often than not means Google.
"We made the point to Microsoft that if anything this will
strengthen search, and strengthen Google," said John Montgomery,
chief operating officer of Group M Interaction, a unit of WPP. WPP
also owns 24/7 Media, a network and exchange that would be severely
affected by the move.
Google already has permission to track a huge number of its
users through its universal opt-in setting, created when it merged
its disparate privacy policies earlier this year. When Google
announced the change, Microsoft went on the attack with an ad campaign claiming
that Google was selling out user privacy to boost ad revenue.
Apple, Yahoo and Amazon, have large signed-in user
bases as well, meaning they've acquired permission to track.
"I actually think it's a good thing for publishers at a high
level," said Dan Jaye, CEO of Korrelate and former adviser to the
Federal Trade Commission. "When third-party data goes away, power
shifts to those with first-party data."
Others may not honor the DNT signal because they'll determine
that the user didn't initiate it; Microsoft did.
As audiences fragment, marketers and agencies want the ability
to follow users as they move across the web, both to inform
advertising and to make sure they aren't showing someone the same
ad repeatedly, or -- as they sometimes say in the business -- ads
for both "dentures and diapers." Advertisers also want the ability
to combine their own data with third party behavioral or even
location data to make ads more targeted and effective.
The entire premise behind ad networks and demand-side platforms
buying audience across the web is that they use data to make
less-valuable inventory more valuable to a given buyer. "If you
can't set cookies and target inventory, you will be monetizing at
75 cents, and not $8," Mr. Jaye said, referring to the cost to
reach a thousand people, an industry measure known as the CPM.
Microsoft's Internet Explorer has been steadily losing share to
Google's Chrome, but is still dominant on desktop computers,
with a 54% share
The last time Microsoft faced a choice its web browser and
advertising, its ad business resisted. Mr. Mundie eventually
oversaw a robust debate between the Windows team led by President
Steven Sinofsky and the Online Services Division, led by former
senior VP Brian McAndrews. Ad industry advocates like the IAB's
Randall Rothenberg and the Association of National Advertisers' Bob
Liodice were also invited to Redmond. Microsoft had just spent more
than $6 billion on aQuantive and its ad server, Atlas, had dominant
"What happened then was a discussion about what was the right
thing for Microsoft to do," said Mr. McAndrews, now a principal at
Madrona Venture Group.
In the end, the ad division won the day, but much has changed at
Microsoft since then. Mr. McAndrews and much of the former
aQuantive team have left the company. Qi Lu, president of the
division, was hired from Yahoo in 2009 to build Microsoft's search
engine, Bing. And engineering resources have been poured into a
hugely complex search integration with Yahoo. "Clearly search is
their primary focus in online advertising," said Mr. McAndrews, who
left the company in 2009.
One thing stayed the same: Microsoft's ad executives were once
again initially blindsided by the move. But this time Microsoft
didn't subsequently convene a discussion including outsiders.
"There was no debate," said Steve Sullivan, VP-advertising tech
research at the IAB. "It was just done."
The company may well be conflicted on the issue. Divisions
across Microsoft can operate like "multiple companies doing
whatever the hell they want," as one former employee said. Even
Microsoft's "privacy by design" stance seems suspect when the
company is also applying for patents that would allow it to target
ads according to consumers' "emotional states based on their search
queries, emails, instant messages and use of online games, as well
as facial expressions, speech patterns and body movements."
As recently as 2011, Microsoft advertising execs were extolling
the virtues of online data. "If we continue to see data as an issue
of priacy and not one of opportunity around an asset, then we are
going to continue to postpone the opportunity that is ahead of us,"
said Rik van der Kooi, corporate VP, Microsoft
Advertising, at an IAB event in 2011.
But display ads are certainly less important to Microsoft than
the success of Windows 8, which will include Internet Explorer 10.
And as Explorer loses ground to Google's Chrome in the browser
wars, Microsoft is hunting for a differentiating feature -- even if
it does hobble the ad side of its business.