On the heels of AT&T(NYSE:T) launching its super fast fiber Internet service (called GigaPower) in Kansas City, the Wall Street Journal reported this week that the $70 monthly price comes with a caveat: users have to allow AT&T to track their web browsing. As in, all of it. If customers do not like it, they can pay up to keep their privacy -- for an extra $29 per month.
While most companies allow users to opt out of tracking for free, AT&T argues the addititional cost for opting out of its "Internet Preferences" is not actually a, uh, fee. The company says the base $70 GigaPower price is actually discounted with the remainder made up through advertising. "We can offer a lower price to customers participating in AT&T Internet Preferences, because advertisers will pay us for the opportunity to deliver relevant advertising and offers tailored to our customer's interests," an AT&T rep told WSJ.
And just in case users think they can circumvent the tracking, the company makes it clear any browser or computer settings will not allow you to get around their system.
But why do this?
AT&T answers for itself: "If you participate in AT&T Internet Preferences, we may use information about your individual Web browsing activity to deliver ads and offers tailored to your interests. For example, if you search for a car online, you may receive an email notifying you of a local dealership's sale," (bold mine).
Yay email ads!
But lots of companies track what you do online, so what is AT&T doing exactly?
The company collects, "The webpages you visit, the time you spend on each, the links or ads you see and follow, and the search terms you enter."
Oh cool, it is like having a friend standing over your shoulder watching everything you do online. Except AT&T is not your friend, and it feels super creepy.
But wait, there is more! "We will not collect information from secure (https) or otherwise encrypted sites, such as when you enter your credit card to buy something online or do online banking on a secure site."
So AT&T is very clear the company isn't a thief. Good to know.
If you think this is terrible idea for a company to charge for privacy, you are not alone. Ars Technica reported earlier this week that while Google (NASDAQ:GOOG) (NASDAQ:GOOGL) obviously tracks users to serve up ads, the company is not doing it the same way as AT&T.
The Google Fiber privacy page says, "Other information from the use of Google Fiber Internet (such as URLs of websites visited or content of communications) will not be associated with the Google Account you use for Fiber, except with your consent or to meet any applicable law, regulation, legal process, or enforceable governmental request."
Basically, Google is not going to use Fiber user information and pair it together with other ad-related tracking systems users have already opted into on other Google services.
Why this matters for AT&T
Of course, charging for data privacy is not going to affect the bottom line either way. AT&T GigaPower service is available for such a small population that it can get away with doing this without a massive backlash, and any revenue it makes from customers signing up for it is minuscule.
But I would bet the company is going to feel some major pressure to end this practice as GigaPower expands, particularly as it moves further into Google Fiber territory.
Google does not charge extra for a non-tracking service, which means AT&T will just end up looking like it is trying to siphon more money from GigaPower customers and doing it in an off-putting "pay up or we will be watching" kind of way.
Chris Neiger has no position in any stocks mentioned. He also doesn't like the idea of paying for online privacy, in case you couldn't tell. That is, unless the NSA is offering a comprehensive lifetime snooping opt-out package ... he'd be on board with that. The Motley Fool recommends Google (A shares) and Google (C shares). The Motley Fool owns shares of Google (A shares) and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.