SUNNYVALE, CA — Apparently responding to a congressional investigation into whether online behavioral tracking violates consumers’ rights, internet search giant Yahoo has instituted a policy that allows users to turn off targeted advertising.The company said it planned to roll out the new advertising opt-out option several months ago, but moved up the program’s schedule when the House Committee on Energy and Commerce began hearings about the issue.
During the first week in August, the House committee asked Yahoo and 32 other internet service providers to reveal what kind of information they collect from surfers and how the information is collected and used. Yahoo announced its opt-out plan August 8th, one week to the day after the questions were asked.
Yahoo acknowledged its new policy may reduce the company’s per-user ad revenue because targeted advertisements generally demand higher prices. However, company officials said the move could attract more privacy oriented users, thereby balancing the effort’s financial effect.
Previously Yahoo allowed users to opt out of only ads delivered by third-party sites. According to company records, in July only 1-percent of Yahoo users had taken advantage of that ability, the company noted.
“Congress has clearly reflected a keen interest in just these kinds of choices,” Srinija Srinivasan, a Yahoo vice president who oversees privacy issues, told The Washington Post. “We want to make sure that we can help them understand the extent of these choices.”
Watchdog groups were not impressed by the measure.
“What Yahoo is doing is better than before, but I think most consumers would expect that if they ‘opt out,’ then the information will no longer be collected,” Ari Schwartz of the Center for Democracy and Technology told the Post, adding that just because Yahoo allows consumers to opt out of receiving targeted ads doesn’t mean the company will stop collecting consumer data.
Microsoft Corp. also allows consumers to opt out of targeted ads, but the company continues to collect their data. Both Microsoft and Yahoo — as well as many other internet companies — say collecting consumer data is vital for a number of commercial purposes.
“As a business, we collect data for many reasons, including legal reporting, fraud detection, financial auditing, law enforcement compliance and research to improve our services,” Kelley Benander, a Yahoo spokeswoman, told the Post.
Most Web companies resist the alternative — allowing consumers to opt in instead of out — because they say it would hamper their ability to gather critical business information and raise the costs of doing business. Free ads delivered to consumers from whom the companies collect data pay for the free consumer services the companies offer, they argue. If Yahoo no longer collected data and served targeted ads, the company might need to charge for currently free services like news, financial information, email and the photo-sharing service Flickr.
“Connecting the right advertiser to the right consumer at the right time — that is the core of success for our business,” Srinivasan told the Post.
