‘Privacy by Default’: Fallout From Microsoft’s Bold DNT Move

The shockwaves reverberated around the digital advertising industry fast and hard – included in Microsoft’s just-released Windows 8 upgrade is Internet Explorer 10, which not only features Do Not Track functionality but is also the first browser with “on” as the default setting.

Oh yes, even Google agreed a few months ago to include DNT in Chrome and Mozilla’s Firefox was the first of the biggie browsers to introduce the tool, but Microsoft is breaking into new territory by setting the switch to “on” from the get-go. IE10 browsers will actually have to opt out of DNT. 

How it works – when hitting a site, a browser with DNT engaged will send an HTTP call to the publisher, which will acknowledge the setting and prevent (most) cookies from being served to that user. That is, if the site complies with the DNT protocol. Agreements between digital advertising advocacy groups and federal regulators appeared to be pushing for universal DNT compliance, but this business with IE10 may be a monkey wrench in the process.

Industry Backlash

The Digital Advertising Alliance (of which Microsoft is a partner) shot off a press release, commenting that in coming to terms with the U.S. government around a Consumer Privacy Bill of Rights, it  “committed to honor browser settings that enable the use of data to continue to benefit consumers and the economy, while at the same time providing consumers with the ability to make their own choice about the collection and use of data about them.” Basically the DAA said its members are cool with complying with DNT, but the default mode should be off.

IAB President and CEO Randall Rothenberg also sent out an email stating: “This represents a step backwards in consumer choice, and we fear it will harm many of the businesses, particularly publishers, that fuel so much of the rich content on the internet.”

Microsoft doesn’t seem to be of the same mindset. “Our decision to provide IE10 customers a ‘privacy by default’ experience in an era when so much user data is collected online reflects our commitment to putting people first,” a Microsoft spokesperson told AdMonsters.

And that’s a lot people put first: according to the most recent data (May) from StatCounter, IE is the tool of choice for 38.35% of US browsers, followed by Chrome at 23.66% and Firefox at 22.41%. Safari, which features private browsing as its default setting, has a 13.51% share in the U.S. When praising Twitter’s decision to comply with DNT technology on May 17, Mozilla Global Privacy and Policy Lead Alex Fowler announced a DNT adoption rate of 8.6% on desktops.

Affected Parties

Tracking devices such as cookies are essential to the ever-growing exchange and RTB-fueled digital advertising landscape. They allow publishers to boost their revenue by packaging users into anonymous audience buckets and marketers to more accurately target potential new and repeat customers.

They’ve also become quite handy when it comes to non-targeted ads – frequency capping to avoid bombarding users is quickly becoming standard practice (even a requirement in terms and conditions). Finally, cookies are increasingly necessary to power social-imbued sites that rely on third-party inputs to provide the desired user experience.

“It will effect the advertiser’s ability to target relevant audiences, thus reducing all of these great efficiencies we (the industry) have created over the last decade,” said Paul Geller, a digital publishing executive, who has been extensively researching and speaking on online privacy issues for several years. “It will effect every major political campaign, PACs and Super PACs that are all using retargeted advertising and most importantly it will effect the quality of life of every consumer using the IE browser.”

There another questions emerges – if IE users feel like they’re missing out on the “Internet experience,” are they more likely to switch off DNT (which Microsoft says can be easily done by visiting Advanced Options in the Internet Options dialog) or switch to another browser?

At Wired, Editor Ryan Singel notes that Microsoft may be taking a stab at old foe Google, which makes a growing pool of revenue off of targeted advertising and has technology that plays a role in about every step. (Google Analytics would not be affected by DNT due to exemptions; however, publishers would not be able to transfer DNT analytics data to Google advertising products.) 

Microsoft would seemingly be shooting its own targeted online display advertising in the foot, but that business is certainly not the company’s bread and butter. According to the company’s fiscal third-quarter 2012 earnings report, online services (including digital advertising) lost $479 million, an improvement from a $776 million loss in 3Q 2011. 

A Stroke Too Soon?

There’s also a sense that this move is premature – the World Wide Web Consortium’s Tracking Protection Working Group is about to open up its standards for a DNT mechanism and guidelines around compliance and scope for public comment. Within the group – composed of  70 diverse organizations, including all the makers of the most-used browsers, privacy advocates, the most major of publishers, and advertising technology and services providers – there’s still a great deal of dissent on issues, such as what DNT actually means. 

As we found out at the AdMonsters DNT Meetup With the W3C, other topics under discussion include the definition of first parties, the concept of multiple first parties, third-party exceptions and language to support opting in. According to the current Tracking Protection Working Group timeline, Proposed Recommendations would be delivered in September, with the final Recommendation sealed in October. There’s still a good deal of work to be done, compromises to be hammered out.

Singel rightly suggests that Microsoft’s “privacy by default” move could “threaten the still-nascent privacy standard, and prompt an ad industry revolt against it.” He quotes Justin Brookman, director of consumer privacy at the Center for Democracy and Technology: “I hope this doesn’t throw a wrench into works on getting agreement on Do Not Track.”  

For DNT to work, the online publishing and advertising community must agree to comply with the protocol. At the AdMonsters DNT meetup, it was commented that any reduction in the audience targeting pool will have a detrimental effect on second-channel ad revenue, and on exchanges, DNT-enabled users would likely be labeled unsellable. Worst-case scenario: nearly 40% of U.S. Internet keep their default IE settings and become untargetable.

Ultimately Geller sees dark omens in Microsoft’s move to make DNT the default on IE10: “It likely means that the quality of advertising will be reduced. Say goodbye to awesome interactive ads with products you’re more likely to enjoy and say hello to pop-ups and pop-unders. The rebirth of the ‘Oh My God. No Way’ ad. 

“Microsoft’s ‘Do Not Track’ setting means the rebirth of pop-up ads and untargeted spamvertising,” he added.

Read more about DNT and sign up for the Ad Ops Speaks on DNT W3C community group (Note: you must register for a free W3C membership first).


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