Microsoft: Privacy Champion?

The tech giant and others are getting serious about giving Web surfers more control over how information from their online behavior is used

by Aaron Ricadela

In its haste to build software that gives computer users new ways to communicate, store data, and scour the Web for information, the tech industry has unleashed a raft of threats to consumer privacy. Recently, though, companies from across the tech spectrum have begun taking pains to rein in such risks amid a backlash from legislators, regulators and consumer advocates. Are the efforts lip service aimed at quelling the furor or might the tech industry finally be getting serious about protecting privacy?

One of the biggest strides comes from Microsoft (MSFT), which on July 23 will unveil a new privacy policy that gives users greater control over what the company does with information it gathers about their online behavior. Microsoft, the world's largest software maker, will let certain users decline to receive ads tailored to their Web surfing habits. The company will also sever the links between information about a computer and the Web searches carried out from that machine after 18 months.

What consumers do online and what companies do with that information strikes at the heart of the computing privacy debate. Companies are keen to cull and store such data so they can tailor products, services, and advertisements to a user's interests. But there's growing concern companies are learning too much about their customers' private lives and not doing enough to keep that information safe from prying eyes.

Senate Hearings Postponed Until Fall

Those worries will take center stage in Senate Judiciary Committee hearings on online marketing and a proposed acquisition that will give Google (GOOG) added control over the Internet advertising business. The proceedings had been scheduled for the week of July 23 but have been postponed until September or October. The committee will ask executives from Google, Microsoft, and Yahoo! (YHOO) to appear, according to a person familiar with the matter.

Competitors and privacy groups say Google's planned $3.1 billion purchase of DoubleClick would concentrate too much knowledge about Internet users' searching and Web browsing habits in Google's hands. The Federal Trade Commission in May began an investigation into the proposed tieup (see BusinessWeek.com, 5/30/07, "Much Ado About DoubleClick"). Amid that grousing, Google said July 16 it will reduce the shelf life of "cookies," the software that embeds itself on a computer and tracks a user's Net habits. Google will ensure cookies expire after two years. Google also said it would make records of users' searches and other behavior on its site anonymous after 18 months.

The privacy battlefront isn't limited to ads. The next version of Apple's (AAPL) Mac OS X operating system, called "Leopard," will include new controls that can help users specify files they don't want backed up because they're too private to share. Leopard, due to be released in October, includes a feature called Time Machine that can continuously back up a Mac's hard drive to a server on a corporate network or a disk drive that's shared by users on a home network. Apple will let users elide certain files during the backup process, says Bud Tribble, Apple's vice-president of software technology and a designer of the original Macintosh software.

Brave New World of Hypertargeted Ads

Fears about online surveillance and misuse of personal information have been amplified as tech companies pitch ads to users based on their behavior to gain a bigger share of a U.S. online ad market that research company eMarketer estimates will swell to $21.7 billion in 2007 (see BusinessWeek.com, 11/15/06, "Taking Aim at Targeted Advertising").