Groups call for investigation of Microsoft ad service

Two consumer advocacy groups have filed a complaint with the U.S. Federal Trade Commission (FTC), saying Microsoft and other web-based companies are using "unfair and deceptive" business practices to collect data about their customers.

The complaint by The Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group (US PIRG), filed Wednesday, asks the FTC to investigate Microsoft's use of customer data collection in its Web advertising service, called adCenter. The adCenter service targets customers with contextual advertising based on their Web habits.

But CDD and US PIRG said Microsoft's tracking of Web user habits goes too far. "Microsoft has embarked on a wide-ranging data collection and targeting scheme that is deceptive and unfair to millions of users," the groups said in their complaint to the FTC.

CDD Executive Director Jeff Chester called on the FTC to shut down new forms of online data collection until consumer safeguards are in place. "Consumers have the right to have the option to opt in [to data collection]," he said. "What is wrong with letting the consumers make decision about how their data is used?"

Microsoft, in a statement, said it is committed to protecting customer privacy. The company offers customers a "clear, understandable" privacy policy, and customer control is important to Microsoft, the statement said.

"From what we have read, they have got it all wrong," Mike Hintze, Microsoft's senior attorney for privacy, said in the statement. "We are very open with consumers about our privacy policies and practices across all of our online services and all of our advertising products. We would be happy to brief the Center for Digital Democracy and others about how adCenter works."

But customers don't have an easy way to opt out of data collection, Chester said. Even when customer Web habits aren't linked with a name, they often can be identified by their Web searches or other web habits, he added. After AOL in August released private search results of thousands of its subscribers, news organizations were able to identify individual users, even though their names weren't released by AOL.

Chester called online data collection "pervasive and ubiquitous" and said the two groups focused first on Microsoft because it has told potential advertisers its data collection techniques are better than those used by rivals such as Google and Yahoo.

The FTC next week is hosting a three-day forum on protecting consumers online, called "Protecting Consumers in the Next Tech-ade," but the agency needs to go beyond a series of presentations by Web companies and take a hard look at data collection, Chester said.

"The time for show and tell is long past," he said."There's increasingly sophisticated ways of tracking people's information online, and there are no safeguards."