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Report: In IE8, Web ads won out over privacy

Some within Microsoft wanted to design IE8 with greater privacy controls, but that effort lost out to the interests of online advertisers, the Journal reports.

Efforts to build Microsoft's Internet Explorer 8 with more robust privacy settings were reportedly stifled by the needs of online advertisers to track user activity, according to a story in Monday's Wall Street Journal.

In designing the browser in early 2008, IE8's development team, led by manager Dean Hachamovitch, wanted to implement new privacy features that would limit third parties from easily tracking mouse clicks and other user activity, according to the Journal. The effort was seen as an attempt to distinguish Internet Explorer from up-and-coming rivals like Firefox, which had gradually been grabbing more of IE's market share.

But the best laid plans of the IE team quickly ran into a brick wall. Executives at Microsoft's ad business argued that the tighter privacy would hinder the tracking needed for online advertising at a time when the company was ramping up to sell online ads after its $6 billion purchase of Web ad vendor Aquantive.

Debate raged within the Redmond offices between both sides, eventually pulling in outside advertising and publishing groups concerned about their online business. But in the end, the online advertising argument proved stronger, leading to a watered-down version of the privacy settings that IE's developers originally wanted, the Journal said.

Instead, IE8 now simply offers a setting called InPrivate Filtering, which users can tweak to manually turn off blocking for specific Web sites. InPrivate Filtering must also be activated each time the browser is launched.

Another feature called InPrivate Subscriptions, which would have automatically prevented tracking from Web sites on certain "black lists," was dropped entirely, according to the Journal. This feature was announced by the IE team in a blog post on IE8's new privacy settings and even appeared in the beta. But it was ultimately jettisoned by the time the final version of the browser was released.

Though the debate apparently was hot and heavy, Microsoft insiders painted the solution as positive. The Journal quoted Microsoft's Chief Privacy Strategist Peter Cullen who expressed his belief that the feedback of the outside ad groups helped the company better balance the needs for both privacy and advertising. The browser "was a better product than when it came off the drawing-room floor of the Internet Explorer group," according to Cullen.

In a Sunday night blog post, Hachamovitch weighed in on the ongoing issue of online privacy and tracking, trying to explain the balancing act between the two.

"Part of what makes online privacy tricky is that browsing the web is fundamentally an information exchange," wrote Hachamovitch. "Your web browser offers information in order to get information. That information can identify you. Often, that information is sent automatically for your convenience (like the languages you prefer to read) to tailor the content for you...Because some of the technologies that can be used for tracking are also essential today for basic functionality, there is no 'Just give me perfect privacy' feature."

Update 9:47 a.m. PDT: Responding to a request for comment, a Microsoft spokesperson said: "People want online services that are personalized to meet their needs and assurance that their privacy will be protected. Microsoft designed Internet Explorer 8 to offer people a variety of privacy protections. Recently the advocacy group Center for Democracy and Technology conducted a browser comparison study (PDF) which demonstrates the strength of the protections provided by IE8."