Microsoft undermines Google's display business

The beta version of Microsoft's Internet Explorer 8 browser, launched last night, has an InPrivate setting which, if activated, keeps users' browsing habits private. This means that companies, such as Google, are unable to deliver targeted advertising because they lack the necessary information about the user.

This is potentially bad news for Google, against which Microsoft has failed to compete successfully for internet advertising income and has so far failed too to get its hands on Yahoo to bolster its efforts. Also, Google still makes almost all of its money from serving search-based adverts which will not be affected by the InPrivate function.

However, it acquired DoubleClick in March for US$3.1 billion (€2.096 billion)  to boost its display advertising income and it's this that could come  under threat through the use of InPrivate.

There is no doubt that millions of users all over the world feel strongly about having their browsing habits exploited without their explicit permission - the row over BT and other deploying Phorm in the UK to serve targeted adverts, for instance, has also enraged the European Union communications commissioner Viviane Reding.

Still, privacy in the wider sense might be a secondary attraction for most users: InPrivate also hides individuals' browsing activities on shared computers and hence has also been dubbed "˜porn mode'.

John Curran, a director at Microsoft UK, was quoted in the Financial Times as saying, "some people will always want to be "˜InPrivate', but there is a trade-off" - meaning they will not automatically receive data relevant to their interests.

This is not a convincing argument. All digital (including mobile) advertisers' proponents claim that receiving relevant information is very important - or at least acceptable - to users (cf Blyk and others), this has still to be proven conclusively, particularly among those over 24. When we want to know something, we search for it and if we want organisations to send us information, we sign up for it.

Finally, while Microsoft's Internet Explorer 8 browser is by no means the only one to protect personal privacy (Firefox does, among others) ultimately the beta version should be rolled into the Windows operating system - installed on most of the world's PCs - and that it looks like the truly phenomenal marketing muscle of Microsoft will make much of its usefulness.