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Last week, Microsoft announced that it would build something called “Tracking Protection” into the next edition of its Internet Explorer Web browser (IE9). Although Microsoft’s proposal got a lot of coverage, including a favorable comment from Federal Trade Commission Chairman Jon Liebowitz, the new feature is a step in the wrong direction for privacy on the World Wide Web.

IE’s Tracking Protection is technically flawed—it can’t stop websites from tracking you—and its existence will give corporate interests a powerful tool for arguing against government regulations that might actually resolve the problem of pervasive Internet tracking.

Microsoft’s announcement comes amid mounting concern over the ability of advertisers to track people across the Web. The Federal Trade Commission recently endorsed the idea that users should be able to opt out of having their online activity tracked. But the technological and legal frameworks that would make it possible to opt out remain far from clear.

People who haven’t been following the controversy regarding Internet tracking often have a hard time understanding just how invasive today’s Internet has become—and why they should care. Much of the press coverage has just confused the situation further by focusing on the role of third-party Web analytics and advertising companies, rather than on the tracking and tabulation done by industry advertising giants like Google, Yahoo, and Facebook. A paradoxical but entirely possible outcome of Microsoft’s new browser feature might be to increase the ability of such companies to track and record everything you do online.

Over the past decade, the Web’s infrastructure has changed in fundamental but invisible ways. No longer do venture firms or subscriptions fund popular information-oriented websites (with the exception of a few outliers like the Wall Street Journal and Technology Review’s premium content). The vast majority of the Web is funded by advertising. Google, for instance, got 97 percent of its $7.3 billion in revenue for this year’s third quarter from advertising.

The reason advertising on the Web has become such an effective moneymaker is that the Web is a two-way communications environment. It is possible to know not just how many times an ad is viewed, but how many times it was seen by the same person, where that person is physically located, and whether he or she saw the ad at home or at work. Advertisers can run multiple ads and see which ones lead to sales—and the value of each specific sale. This gives the Web a tremendous advertising advantage over other media. In effect, advertising dollars have been sucked out of thousands of print magazines and pumped into Google’s coffers.

Now Internet advertising is embarking on its next big step—a push into something called behavioral advertising, in which the ads you see are selected according to the totality of your online behavior. Publishers are excited about behavioral advertising because it brings in dramatically more money—an average of $4.12 per 1,000 displays of a behaviorally targeted ad, versus $1.98 per thousand for an untargeted ad, according to one study. But according to Susan Grant, director of Consumer Protection at the Consumer Federation of America, most Americans find the very idea of behavioral advertising creepy. At a hearing December 2 of the House Subcommittee on Commerce, Trade and Consumer Protection, titled “Do-Not-Track Legislation: Is Now the Right Time?” Grant cited a 2009 survey by researchers at the University of Pennsylvania in which 84 percent of respondents said they did not want advertisements they saw on one site to reflect what they had done on other sites. “More than 90 percent agree that there should be a law that requires Web sites and advertising companies to delete all stored information about an individual if the person requests them to do so,” she said at the hearing.

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Tagged: Communications, Google, Facebook, Microsoft, privacy, advertising, tracking software

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