Monday, February 4, 2008

Microsoft Bid for Yahoo Raises Privacy Flags

As has been the unstoppable and insatiable trend of the last 30 years, the internet now too is consolidating at a breakneck speed. I have talked in the past here about the Google/Doubleclick merger request, and the privacy implications of such a deal (the hope is the European Commission will stop that one), and now, unfortunately, we've got an even bigger concern on our hands: Yahoo meet Microsoft...Microsoft meet Yahoo...gee, why would anyone have a problem with this privacy eviscerating and consumer stomping merger?

Frederick Lane of the Newsfactor reports:

"Today's proposed acquisition by Microsoft of Yahoo, if consummated, will create a powerful interactive Internet duopoly in online media," said Jeff Chester, executive director of the Center for Digital Democracy, in a statement e-mailed to reporters. "Google and Microsoft will have inordinate power to shape the online communications marketplace, including journalism, entertainment and advertising. In an era when individuals are increasingly conducting their personal, social and political lives online, the corporations that control the digital experience will have a far-reaching influence over every aspect of society."


Among other things, Microsoft CEO Steve Balmer boldly stated, the proposed deal would make it possible for Microsoft to conduct more effective behavioral targeting, long the Holy Grail of advertisers in general, and particularly in online advertising.

It is precisely that prospect which concerns consumer advocates. Chester said the refusal of the Federal Trade Commission and Congress to impose reasonable restrictions on the Google acquisition of DoubleClick led directly to Friday's bid by Microsoft.

"The proposed deal," Chester argued, "underscores the need for both the FTC and the Congress to enact policies that will protect consumer data online. They are already at risk. In an online era dominated by digital behemoths, consumers will be more vulnerable to having their personal information become the property of the GoogleClick's and Microhoo's!"

The Washington Post covers the story from a slightly different angle - as in - can it be stopped by the US or the European Union?

A major factor weighing in Microsoft Corp.'s favor, analysts said, is Google Inc.'s dominance in the online search and advertising businesses _ the two areas regulators are likely to focus on when weighing market power issues raised by the nearly $45 billion unsolicited bid.


The Federal Trade Commission in December approved Google's $3.1 billion purchase of online advertising company DoubleClick Inc., but European Union regulators are still examining the deal and Google has said it won't go forward without their blessing. (Microsoft lobbied hard against the deal, arguing that it would give Google a dominant position in the online ad market.)


"Despite the appearance of unlimited choice in the new media environment, people's online activities will be tracked and shaped by a very small number of companies who care far more about surveillance and targeted advertising than the public interest," Turow said.

Marc Rotenberg, executive director of the Electronic Privacy Information Center, agreed and said "the problem of profiling Internet users will become more severe if mergers go forward without appropriate privacy safeguards."


Sen. Herb Kohl, D-Wis., chairman of the Senate antitrust subcommittee, said the same issues that prompted lawmakers to review the Google-DoubleClick deal exist in a potential Microsoft-Yahoo combination, including examining how it affects consumers, advertisers and businesses "who increasingly use the Internet for their news, commerce and entertainment." If Yahoo accepts Microsoft's offer, the subcommittee expects to hold hearings to "explore the competitive and privacy implications of the deal," Kohl said.

Click here to read the article in its entirety.

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