The key to success in the online-ad business is accumulation of precision profiles of individual users, along with the capability to reach them wherever they are, one expert says.

Share story

For Dan Kristoff, letting one big Internet company track a decade of his personal Web habits is one thing. But what happens to all that data when the company is sold?

With the increasing likelihood of Microsoft acquiring Yahoo, consumer groups and privacy advocates are asking the same question. Congress also intends to explore it while looking at competition and antitrust questions of the proposed deal.

The war for advertising dollars between Microsoft and Google is determined by their ability to place ads in front of Internet users.

All three companies have their own troubles with privacy protection, said Jeff Chester, director of the Center for Digital Democracy, a Washington, D.C.-based public interest group.

But he worries the emergence of two digital data giants will bring new threats to privacy and diminishing choices for consumers.

“Yahoo is already the largest behavioral-targeting platform,” Chester said. “They are collecting a lot of user profiles and behavior. What happens to that? Does it get integrated into the Microsoft system? Do users have any control over it?”

Kristoff, a factory worker in Northfield, Ohio, and a longtime Yahoo user, said he’s concerned about the security of his personal information.

He worries for “any of us that have an account with Yahoo, if this deal goes through, Microsoft will use this data to see what we like and do not like.”

Microsoft contends the merger would increase competition, given Google’s dominance in search and online ads.

The company said it adopted privacy principles for search and online advertising last year and supports comprehensive federal privacy legislation.

Many analysts say the wheels were set in motion when Google bid for DoubleClick last year, building a search and advertising powerhouse.

The Federal Trade Commission let the deal go through without restrictions, despite objections from Microsoft and groups like the Center for Digital Democracy.

“The regulators have allowed everyone to get bigger,” Chester said. “Many people may give Microsoft the green light to merge with Yahoo just to provide some form of competition with Google.”

Google’s bid for DoubleClick is still under review by European Union antitrust regulators. Last week, EU privacy regulators reiterated that Internet search engines based outside Europe must comply with EU’s data-protection rules, adding they plan to issue a report in April detailing what changes the companies need to make.

The more stringent European rules state that consumers must agree to their data being collected and have the right to object or verify their information. The privacy group said Internet search engines such as Google, Yahoo or MSN are important because they are now “a daily routine for an ever growing number of citizens.”

All three have made sizable investments in technology that collects and analyzes the behavior of consumers.

The key to success in the online-ad business is accumulation of precision profiles of individual users, along with the capability to reach them wherever they are, Chester said.

Yahoo assembles a profile of a person’s behavior based on searches within Yahoo, videos watched, ads clicked and visits to Yahoo sites and partner sites such as eBay. The profile that emerges could have details such as a person’s basic salary, health concerns, cars, number of children, gender, age, ZIP code, industry and work.

Some of that is data consumers volunteer when signing up for an account.

Yahoo user Mark Jameson says he’s not too concerned.

“I do not consider [Microsoft] to be any more of a risk with my personal information than any of the online players that I have signed up with over the years,” said the Toronto air traffic controller.

Jameson said he was aware his personal data could end up in the hands of another company through a merger or other means. But at some point, he says, consumers just have to trust that it will be protected.

“Frankly I am just as concerned about my personal info when I make a credit-card transaction or use a bank card.”

Mark Cooper, research director of the Consumer Federation of America, says the Microsoft-Yahoo deal raises new questions of competition and privacy where old rules don’t apply.

If a company controlled too big a database, one classic antitrust solution was to force it to share the database.

“That’s not the solution we want,” Cooper said. “Even in a competitive market, consumers need much more protection than the market is going to give them.”

The issue is much broader than either privacy or competition, he added. It’s about the direction of a technology built on the promise of diverse voices and media democratization.

“A lot of these Internet activities are in fact becoming highly concentrated duopolies,” Cooper said. “They don’t look like the competition we thought we were going to get.

“It’s time for public policy to re-examine this space because the number of alternatives has, in fact, been diminished.”

Kristi Heim: 206-464-2718 or

The Associated Press contributed to this report.