How is Microsoft Provoking Advertisers?

Microsoft’s (NASDAQ:MSFT) plan to launch Internet Explorer 10 with a default “do-not-track” function has prompted complaints from more than 30 companies that advertise through the search engine, including Procter & Gamble (NYSE:PG), Coca-Cola (NYSE:KO), Wal-Mart (NYSE;WMT), Ford (NYSE:F), and General Electric (NYSE:GE).

A letter, composed by the Association of National Advertisers and signed by the chief marketing officers of Microsoft’s advertising clients, was sent to the company’s CEO Steve Ballmer opposing Microsoft’s decision.

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The letter’s timing was not coincidence; Microsoft executives are meeting at Advertising Week in New York to launch new native ad products for Windows 8 and a redesigned MSN.

With the “do-not-track” function, the new version of Internet Explorer will prevent consumers from being targeted directly by advertisers. However, advertisers, who spend approximately $2.8 billion per year advertising through Microsoft, find the function to be a “deliberate abuse of open standards.”

According to the letter written by the ANA, “Microsoft’s announcement has been uniformly met with outrage, opposition, and declarations that Microsoft’s action is wrong.”

But for Microsoft, browser design decisions take priority over advertising clients; Microsoft’s advertising division loses $8.1 billion a year.

Posted on the company’s blog in June, Microsoft’s chief privacy officer Brendon Lynch wrote that the “do-not-track” setting was part of the company’s “ongoing efforts to strengthen privacy for consumers.” He added that the company disagreed with those “who argue that the default setting for DNT should favor tracking as opposed to privacy.”

But despite the company’s strong anti-tracking stance, Microsoft may be shifting back toward targeted advertisements. Market analysis publication Ad Age reported that Microsoft head of advertising Rik van der Kooi said Windows 8 will now prompt users during the setup process to chose whether they want to be tracked or not. The original, default “do-not-track” function gave no such choice.

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