Yahoo to Make Targeted Ads Optional

By Peter Whoriskey
Washington Post Staff Writer
Friday, August 8, 2008

Internet giant Yahoo is set to announce today that it will allow users to shut off targeted advertising on its Web sites, a move that comes as a congressional committee continues to air concerns about consumer privacy.

Last week, the House Committee on Energy and Commerce asked Yahoo and 32 other Internet companies to provide more information about the surfing data they collect from Web users and how the data are used to customize advertising.

As many media companies struggle to make money from their Web sites, members of Congress and the industry appear to be in the early stages of a high-stakes negotiation over what kind of advertising ought to be allowed.

While Yahoo's new policy may make it harder for the company to make money from ads -- targeted pitches generally fetch higher prices -- company officials said offering more privacy options could attract more users.

Some evidence suggests that only a small fraction of Internet users choose to opt out of customized advertising. Yahoo currently allows users a more limited opt-out option -- for advertising delivered by Yahoo to third-party sites. But in July, only a small fraction of 1 percent of users visited the Web site for doing so, company officials said.

"Congress has clearly reflected a keen interest in just these kinds of choices," said Srinija Srinivasan, a vice president at the company who oversees privacy issues. "We want to make sure that we can help them understand the extent of these choices."

Yahoo said it had planned to roll out the new privacy option months ago but moved up the announcement to coincide with the questions from Congress.

Some watchdog groups reacted coolly to the new measure, however, primarily because opting out of customized advertising does not stop Yahoo from collecting data.

Microsoft similarly allows users to opt out of customized ads, but continues to collect information as a user browses the Web or uses the company's online services, according to its privacy policy.

"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," said Ari Schwartz of the Center for Democracy and Technology.

But officials at Yahoo and elsewhere say data collection is necessary for an array of business purposes, not just advertising.

"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," said Kelley Benander, a Yahoo spokeswoman.

Others have suggested that online tracking ought to be done only if a customer explicitly agrees to be tracked -- or "opts in." But the Web outfits say that guarding so many consumers from targeted ads will impair their ability to offer many free services. Yahoo provides news, financial information, e-mail and the photo-sharing site Flickr, among other services.

"Connecting the right advertiser to the right consumer at the right time -- that is the core of success for our business," Srinivasan said.

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