Yahoo Expands Privacy Controls Across Portal As Regulatory Scrutiny Sharpens

Hoping to mollify Congress and state legislators, Yahoo (NSDQ: YHOO) is broadening ‘opt-out’ controls covering targeted ads across its portal. Yahoo offered up the new tools as part of its response to a Congressional inquiry about ad targeting sent to 33 companies, including AOL (NYSE: TWX), Google, Microsoft (NSDQ: MSFT) as well as internet service providers like Cablevision (NYSE: CVC), Cox Communications and Charter Communications (NSDQ: CHTR), from the House Energy and Commerce Committee. The House’s activity follows similar hearings held two weeks ago in the Senate, following concerns that led Charter Communications to drop its ad targeting experiment with NebuAd last month.

Yahoo’s enhanced opt-out provision should be available by the end of the month. Yahoo will set up a “privacy center” link on the home page and nearly every page on the Yahoo.com network. Users will also be able to access the opt-out through a link in the public service advertising campaign Yahoo has been running with online ads across its network to educate users about customized advertising. The company already allows users to opt-out of ads its serves on third-party sites like eBay (NSDQ: EBAY). Late last year, internet marketing companies breathed a sigh of relief when the Federal Trade Commission said it would let the industry police itself rather than adopt new regulations. But the FTC has been considering whether new regs might be necessary in the face of rising consumer complaints and federal and state legislative activity taking aim at behavioral targeting practices. Release

LAT: Not surprisingly, Yahoo’s measure doesn’t go far enough for privacy advocates. And since this is an election year, it’s an open question whether Congress will feel that Yahoo has done enough for its taste as well. As Jeff Chester, of the Center for Digital Democracy, points out, Yahoo doesn’t want a Congressional clampdown on its search deal with Google (NSDQ: GOOG). For the CDD, the problem is that Yahoo is still going to collect user data, even if they opt-out. Chester also dismisses as disingenuous Yahoo’s argument that without the ad revenue it makes from targeted ads, it wouldn’t be able to offer as much free content.

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