Media News

Privacy concerns seen hurting online ad biz

Google employees stand outside the Google Inc. headquarters in Mountain View, California May 22, 2008. REUTERS/Robert Galbraith

WASHINGTON (Reuters) - Federal, state and consumer discomfort with Google Inc, Yahoo Inc and other companies tracking consumers’ online behavior could slow the growth of Internet advertising, a financial services research group said in a report on Wednesday.

The organization, Stanford Group Co, cited moves by the state legislatures in New York and Connecticut to ensure consumers’ privacy online; the Federal Trade Commission’s call for industry self-regulation; and complaints by lawmakers as signs that the advertising model may face some controls.

Further, a survey by research firm TNS Global found that 42 percent of Internet users would opt out of online tracking if they could, the Stanford Group said.

“We think the growing government scrutiny is likely to make it easier for consumers to opt out of behavioral tracking, which in turn will reduce the number of web surfers that can be reached through behavioral advertising,” the group said in a statement.

“The momentum toward disclosure/opt-out has negative implications for the rapid growth of online advertising,” the group said.

The move toward privacy could hurt Google and Yahoo as well as Comcast Corp, Verizon Communications Inc and other companies moving into the Internet advertising market.

Reporting by Diane Bartz, editing by Gerald E. McCormick