Microsoft CEO Steve Ballmer AP Microsoft stunned the online ad business earlier this year with its announcement that the Internet Explorer 10 browser, when launched, would be set to a default "Do Not Track" position, frustrating advertisers who want to target users based on their browsing history.

But the ad biz can breathe easy: IE10 contains a gaping flaw that will allow any advertiser to ignore its DNT signal, multiple sources tell us.

The hole is that the DNT is merely a signal telling advertisers about users' preferences to not be tracked—it's not a mechanism that actually blocks web ads from dropping tracking "cookies" onto browsers' desktops and devices.

Any advertiser who wants to ignore the signal and drop tracking cookies anyway will be free to do so. (There's a longer, technical explanation here.) Steve Sullivan, vp/ad technology at the Interactive Advertising Bureau, tells us:

"IE 10 'do not track' does not represent anything more than a flag sent by the browser in the form of an HTTP header. This is a passive thing that does not result in any kind of blocking. DNT has always been envisioned as a voluntary guideline."

In a May blog post, Microsoft Chief Privacy Officer Brendon Lynch admitted the DNT signal may be ineffective:

"Sending a DNT signal from a browser is only part of the process. Obviously, for DNT to be effective, it is also important that websites have a common understanding of what the consumer expects when their browser sends the DNT signal."

"At the moment there is not yet an agreed definition of how to respond to a DNT signal, and we know that a uniform, industry-wide response will be the best way to provide a consistent consumer experience across the Web."

Microsoft's big U-Turn

The launch of IE10 has been a huge controversy in the online ad business. Web advertising is almost entirely dependent on advertisers' ability to track what users are looking at with cookies. That information doesn't identify users specifically, but it may give advertisers aggregated data about what they're interested in and which demographics they belong to. That information can be used to serve ads that are more relevant to users.

Without cookies, advertising on the web is a largely random, untargeted affair—and advertisers won't tolerate it.

In June, executives from major ad agency holding companies confronted management at Microsoft Advertising to ask them why they were seemingly trying to destroy the value of any ad inventory seen by an IE user. Microsoft had previously indicated that DNT would be an option that consumers would have to affirmatively select if they wanted to browse in private.

The DNT policy reversal was seen by some as a precursor to Microsoft leaving the ad business altogether. In July, there was a round of layoffs at Microsoft Advertising and at least 10 senior executives left, including general manager Rick Song and director of sales for Atlas Seth Bardelas.

'Nothing unscrupulous in ignoring DNT'

Now, the industry is slowly waking up to the fact that IE10 doesn't actually stop tracking. It simply asks advertisers not to track users. That could set the stage for IE10's DNT signal to be widely ignored by advertisers. Clients and their agencies could feel comfortable doing this because the online ad business is so complicated—with dozens of networks, exchanges, "demand-side platforms," "supply-side platforms," publishers and real-time bidding auctions—that it's common for buyers not to know how or where their ads get placed.

Moreover, some in the business don't recognize default DNT as an actual consumer choice worthy of respect. One source tells us:

"... there’s nothing unscrupulous at all in ignoring a DNT signal that was not turned on by the user. Industry consensus prior to Microsoft’s move – consensus that included both industry groups and consumer groups – was that DNT had to be actively turned on by users, and not machine-driven."

"... I can’t imagine labeling as unscrupulous any publisher that determines to ignore a header signal unilaterally imposed without consumer consent by a single giant technology company outside all the consensus mechanisms industry has been driving for years."

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