Google, Yahoo Cut Cookies For Search Ad Deal

Google and Yahoo promise to let users opt out of cookies online after they, Microsoft and ISPs are challenged by lawmakers in the House Committee on Energy and Commerce. Though the cookie cutting is positioned as a way to help protect users' privacy interests, the real reason for it is that Google and Yahoo want to clean their plates as they prepare to argue the merits of their joint search ad deal to the DOJ.

The media and bloggers rushed to cover the fact that Yahoo said it will let its users opt out of custom ads on its Web site, while Google said that it will let its own users opt out of a single cookie for both DoubleClick ad serving and the Google content network.
Yahoo's and Google's cookie-cutting moves, as I like to call them, were announced as a measured response to a Congressional inquiry about ad customization sent to 33 companies from the House Committee on Energy and Commerce the previous week.
Appeasing the committee is important; the committee wants to determine whether the way that search engines and ISPs track Web searches is legal.
While Google and Yahoo moved to soothe the committee, the more crucial questions are why Yahoo and Google didn't do this sooner, and why they did do this so quickly while the other 31 companies are weighing the request.
They didn't do it sooner because nothing was weighing on them. No group had leverage to make Google and Yahoo let users opt out of cookies, and frankly, not enough users are savvy enough or care enough to force the companies' hands.
I know plenty of people who use Google and Yahoo and don't realize that their Web-surfing habits dictate ad dispersal.
But the government is a bit more savvy, and there is one big reason why Google and Yahoo practically fell prostrate in answering the House so fast.

Google and Yahoo have a pretty significant search advertising pact in the works. The only reason it isn't in effect now is that they vowed to wait three and a half months to let the Department of Justice review it for approval.

They announced the deal June 12, and if all goes well, they could begin their agreement by the end of September. But the deal faces opposition from Microsoft, privacy advocates and others scared to death that Google is gaining too much power in the market.

By answering the House Committee on Energy and Commerce's requests for information about how their advertising works, both Google and Yahoo want to make sure those issues don't delay their search ad deal any further. The Senate subcommittee is already looking at this search ad deal.
So, what exactly did the companies announce? Yahoo Aug. 8 said in a letter to the House Committee on Energy and Commerce that it will offer opt-out of customized advertising on, expanding its existing opt-out program for customized ads served by Yahoo on third-party networks.
"We understand that there are some users who prefer not to receive customized advertising, and this opt-out will offer them even greater choice," said Anne Toth, Yahoo's head of privacy and vice president for policy.
This new opt-out capability will be available for consumers by the end of August. The tool will be accessible through a link in Yahoo's privacy center, which is linked on the home page and nearly every page on the Yahoo network.
Google went a little further in its letter to the committee, specifically telling the members that it does not do so-called "deep-packet" inspection to derive information about users to better target them with ads.
However, Google did acknowledge in its letter that it does believe that behavioral advertising, if done carefully, can be a valuable tool for the company to leverage. Google noted in its letter:

"Though it is not the focus of our business today, we also believe that behavioral advertising can be done in ways that are responsible and protective of consumer privacy and the security of consumers' information."

The key question that Google has yet to answer is how. How will it institute viable behavioral advertising without using cookies and Web-surfing behavior to know what its users are doing online?

This will continue to be a crucial issue as Google, Yahoo, Microsoft and other companies that depend on online ads as a revenue stream leverage behavioral targeted ad capabilities to place the right ad in front of the most appropriate Web consumer.

These companies will have to strike a balance between leveraging information about users' Web-surfing habits to create more appropriate ads, and respecting users' privacy.

The latest cookie cutting from Google and Yahoo is being positioned as a move toward the latter, but again, I just think the vendors felt compelled to make these moves to keep their plates as clean as possible as they attempt to sway the DOJ on the legitimacy of their search ad deal.