Microsoft to FTC: Think Bigger Than Behavioral

As the Federal Trade Commission collected the final industry and public comments on its proposed self-regulation principles for behavioral targeting, Microsoft submitted a response of its own signaling it would prefer a broader approach.

In its formal comments on the principles, submitted Friday, the company asked the regulator to embrace a wide-angle view of online privacy matters — one that includes all forms of data collection.

“We believe there should be a comprehensive policy that applies not just to behavioral advertising but also other areas where data is being collected… such as contextual advertising,” said Frank Torres, Microsoft’s director of consumer affairs.

Microsoft’s call for data inclusiveness comes as some other firms warn the FTC’s definition of behavioral advertising is too broad. For instance, Google warned last week that the definition could be interpreted to include its bread-and-butter keyword-based search targeting business. Others were concerned the document failed to distinguish between site-side and network advertising, or between personally identifiable and non-personally identifiable information (PII and non-PII).

Microsoft’s proposal addresses some of the same issues. The document calls for a five-tiered approach to online advertising. At a bare minimum, it suggests parties engaged in any form of online advertising should offer prominent notice of their practices while guaranteeing data security and limited data retention. Microsoft calls for properties engaged in third party data collection of any kind for targeting across an ad network to feature a homepage link describing its multi-site data sharing practices. It proposes data such as page(s) visited, day and time of visit, and IP address should be covered.

Additional suggested rules govern various applications of behavioral targeting, including network-based targeting using non-PII, the merger of PII with non-PII and targeting to sensitive data segments using PII.

In the body of its comments, Microsoft Associate General Counsel Michael H. Hintze wrote, “The Commission�s focus on behavioral advertising is too narrow because it fails to capture the full array of online advertising activities, all of which have potential privacy implications and some of which may be contrary to consumers� expectations.”

Microsoft has become known for a go-it-alone strategy with regard to its ad policy initiatives, at both Federal and State levels. For instance, it’s one of the few Internet giants not formally involved in a coalition of Web companies that work together to influence state policy. The group, which includes Google, Yahoo, AOL and eBay, was once affiliated loosely but incorporated officially this year. Its most recent action was a letter sent to New York Assemblyman Richard Brodsky, sponsor of a bill regulating behavioral targeting.

Some members of the coalition told ClickZ last week they believe Microsoft aims to differentiate itself by opting out of their club. Even so, one source told ClickZ the company has participated in recent discussions.

While Microsoft may appear eccentric in its government policy initiatives, Torres said its distinctive response to the FTC was driven by a long-range view on consumer data and its role in the future of digital advertising.

“One of the reasons we approached this the way we did was we’ve already reached the conclusion that something needed to be done in this space,” he said.