Standing squarely against its fiercest digital competitors, Microsoft Corp. is pushing a bill in the Connecticut legislature that would help consumers learn how Internet trackers compile personal information about them for purposes of targeted online advertising.
The bill is opposed by the likes of Google, AT&T, AOL, Yahoo Monster and Verizon.
H.B. 5765 passed the House General Law Committee by a 19-0 vote late last month and is waiting to be called up for consideration by the full House.
That call may never come because, according to the committee’s clerk, the bill has no staunch legislative backers — only an aggressive lobbyist, who, it turns out, has Microsoft as a registered client.
National advocates for Internet privacy view the showdown in the Connecticut General Assembly as a skirmish in the full-scale war between Microsoft and Google for dominance in the sphere of online marketing.
“Microsoft has made a decision to differentiate itself by adopting a pro-privacy position,” said Jeff Chester, executive director of the Center for Digital Democracy, a nonprofit group based in Washington, D.C.
Microsoft had sought to acquire Web display ad giant Double Click but lost out to Google.
Now, Microsoft, the Web’s third largest search engine, is making a play for Yahoo, which is resisting. Yahoo is No. 2 in searching, behind Google.
In the takeover battles that will help decide ultimate online dominance, companies need political and regulatory support.
Microsoft has a history of fighting antitrust challenges from regulators in Washington and Europe over the market power of its Windows operating system.
Privacy Issues
Chester said Microsoft’s public support for the Connecticut bill — also backed by pro-consumer Attorney General Richard Blumenthal — might be characterized as a “political ploy.”
“You’re able to show you’ve been on the right side of the privacy issue,” Chester said. “You show that to regulators in Washington and Europe and to Democrats in Congress. It helps vis-à-vis Google.”
In the absence of federal regulation of online data collection and advertising practices, several states, including New York, California, Utah and Illinois, have begun to consider state-level legislative remedies for consumers.
The Connecticut bill would, among other things:
• Require online third-party advertising networks to post notices about their data collection and how they use the personal data and data on Web site visits.
• Prohibit networks from using sensitive medical or financial data or sexual behavior or orientation information for online preference marketing without the consumer’s consent.
• Prohibit the merging of personally identifiable information with non-personal identifiable information without the consumer’s consent.
In testifying in favor of the bill, Blumenthal said he would eventually like to see the equivalent of a telephone do-not-call list for Internet users — a system that would allow consumers to “opt out” of the advertisers’ efforts to compile data for purposes of online target marketing.
Widespread Opposition
A group of 10 companies, including Google, said the initiative is premature and would have unfairly broad implications.
“It is impossible for advertisers to be sure they are not dealing with a Connecticut resident … so to comply, advertising networks would need to change all their practices with regard to all users,” they said in a joint statement.
In effect, the Connecticut law would compel nationwide compliance.
“Connecticut should wait for the federal government to establish standards in this area, rather than rush forward to legislate,” they wrote.
AT&T Connecticut wrote separately that the bill is “well-intentioned but ill advised.”
Microsoft On Board
Microsoft, on the other hand, “fully supports H.B. 5765 as it stands today,” Robert Gratchner, the company’s director of privacy, testified last month.
He noted that Microsoft “announced a set of robust privacy principles last July for online search and advertising.”
He told the General Law Committee the company believes the bill is “a thoughtful and well-crafted attempt to balance the need to ensure consumer privacy with important business realities of the Internet.”
Ken Scott, the committee’s clerk, said the measure doesn’t appear to have any active legislative supporters.
Lobbyist Drove Bill
He said one lobbyist, P.J. Cimini of Capitol Strategies Group in Hartford, has been its most obvious champion.
“That’s who drove this to the point where it was brought out (of committee),” Scott said of Cimini.
Cimini did not return phone calls requesting comment.
In his required lobbyist disclosure statement filed with the secretary of state, Capitol Strategies lists Microsoft as one of its clients.
The filing also names his Microsoft contact, Mario Rebello, who has served as U.S. Director of Corporate Citizenship for Microsoft.
When a reporter dialed the phone number listed for Rebello in Cimini’s filing, the man who answered said it was a wrong number and hung up.
