Google Gets Hit On Privacy Concerns

Recently Microsoft (NASDAQ: MSFT  ) joined and escalated an attack on Google (NASDAQ: GOOGL  ) focused on claims that the company reads your email in order to better target ads. While Mr. Softy cloaked the offensive in the guise of a public service announcement, the company's point that its Outlook email software was secure was not lost on consumers. Additionally, Google is facing another hit from across the pond, as a newly created EU law may allow regulators to attempt to fine the company up to $1 billion for not explicitly giving users enough control over what is collected.

While I can see both sides of the argument -- Google's being that an algorithm pulling keywords out of emails that never see human eyes in order to create an enhanced user experience -- the company's recent "they just don't understand" claim is disingenuous and not in keeping with best practices. At the recent RSA security conference, representatives from both Google and Facebook (NASDAQ: FB  ) made clear that they are not heeding "Do Not Track" requests because they do not believe consumers know what they are asking for with the request. While the request may not be clearly understood in terms of all of the nuances involved, consumers who make the request are sending a message of "stay out of my computer," and the details are unimportant. The issue is likely to become a critical one moving forward and shareholders are advised to pay careful attention as specifics emerge.

Do Not Track?
At the center of Do Not Track features and requests is the concept that users do not want their online behavior, browsing habitsm and site visits tracked by anyone. The reality that this data is aggregated across thousands of users before it ever sees human eyes is simply not the point for those who make the request. From a legal perspective, this becomes a slippery slope that starts with the best intentions but can lead to questionable ground.

For example, even though data is aggregated, can it later be parsed and traced back to a specific user? The argument that the company does not, and never would, do that is admirable as a business practice, but it quickly becomes blurred as legal issues arise. While the company may even be prohibited from parsing the data, is there anything to stop a court from ordering Google to compile that information. Again, the easy answer is that no court would ever blatantly trample privacy rights in this way. What about in an extreme case where human life might lay in the balance? Under these circumstances don't we want to give ourselves the best chance possible to save lives? Of course once the proverbial can of worms is opened, it becomes very hard to close it again.

The law enforcement case is an easy one, but do some civil matters rise to the level of critical in which your browsing history could be discoverable by a court? The line keeps moving on issues like these until no line exists at all, and this gets people worried. I have no wish to sound like a conspiracy theorist, but privacy is the No. 1 legal issue of our generation and it is far from defined. For many individuals, the far easier choice is to say that he or she does not want that information tracked in any way, thus removing the possibility that it may become available for scrutiny after the fact.

Senior policy counsel at Google Keith Enright chalked up the "confusion" issue to a lack of a clearly recognizable standard. Facebook's Chief Privacy Office, Erin Egan, said: "For Facebook, we have social plugins. We don't use that data for an advertising purpose, we use it to personalize the data on those page." With all due respect to both of these individuals, these sound like weak excuses, not legitimate policy decisions. The reality is that both Google and Facebook rely on this type of data to make their products work, or at least to make them work better. If data mining becomes restricted, it will become more difficult to tailor ads and the overall user experience.

In response to the controversy, Microsoft has released its latest version of Internet Explorer that comes preloaded with a Do Not Track feature turned on by default. Coupled with its marketing push on its Outlook email system, the company is shooting directly at Google. Mozilla's Firefox browser has had this feature for some time and the company reports that roughly 14% of users have turned it on.

From an investment perspective, it may be too early to have a clear picture of how these issues will play out, but they are going to be important over the next several years. While Google may be taking a hit in the court of public opinion, this is not likely to create too big a shockwave. For the time being, Google continues to look strong and belongs in your technology portfolio.

As one of the most dominant Internet companies ever, Google has made a habit of driving strong returns for its shareholders. However, like many other web companies, it's also struggling to adapt to an increasingly mobile world. Despite gaining an enviable lead with its Android operating system, the market isn't sold. That's why it's more important than ever to understand each piece of Google's sprawling empire. In The Motley Fool's new premium research report on Google, we break down the risks and potential rewards for Google investors. Simply click here now to unlock your copy of this invaluable resource, and you'll receive a bonus year's worth of key updates and expert guidance as news continues to develop.


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