Microsoft’s sly dig at Google on Capitol Hill

Sometimes we find opportunities in strange corners.

Earlier this week, I was in Washington covering a Senate hearing looking into the privacy implications of behaviorally targeted ads on the Internet. And, as with most of the discussions on that issue, we got a lot of what we expected — privacy advocates called for muscular legislation, free-market advocates championed the free market, and the industry folks touted the strength of their internal privacy controls and asserted with some adamancy that it is in their business interest to maintain the trust of their customers.

Two of those industry folks were Mike Hintze, associate general counsel for Microsoft, and Jane Horvath, Google’s senior privacy counsel. To be sure, the companies they represented are fierce rivals, but their attorneys had a lot to agree on when it came to the hearing: they have similar policies regarding their server logs; both advocate a baseline federal privacy policy; and both only want it to be a general law, not one with unique requirements for online advertising.

But Microsoft, which occasionally draws an Ahab comparison for the fanatical zeal with which it pursues Google, managed to get a shot in at the great white whale even in this unlikely setting.

Throughout the hearing, senators repeatedly expressed the opinion that consumers simply don’t know that much about what goes on behind the scenes with online advertising. Since they don’t know much about the system, how can privacy ever become a high consumer priority. But with greater education, consumers would care about privacy more, and then companies would try to use their privacy controls to their competitive advantage, each claiming they were more protective of consumers’ data than the others.

That was all he needed.

“We definitely see a nexus between competition and privacy, in that if there does become a dominant player in the online advertising space, that means there is a single company that is collecting more data,” Hintze said. “It could become the case where a single company has a nearly complete picture of online behavior.”

He left the company unnamed, but in light of Microsoft’s repeated assertions that the online-ad market needs a viable competitor to Google, he didn’t need to say it.

Horvath said nothing.

This comes as the Justice Department is undertaking a review of Google’s ad deal with Yahoo, following the collapse of Microsoft’s efforts to buy the company. Knowing that the deal, if consummated, would do nothing but make Google stronger and make it a more distant third, Microsoft is not a big fan of the arrangement.

Such was the glimpse into the logic that Microsoft no doubt hopes to impart on its old friends at the DoJ: A vote of no-action on Google-Yahoo doesn’t just hurt the online-ad market, it hurt Americans. You decide.

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