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Google Privacy Missteps A Boon For Rivals

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As much of the technology world recoiled last week at the latest evidence that Google is reaching into users’ personal lives for more details it can sell, one small group of companies were celebrating. After all, here was an enormous growth opportunity for a fledgling market in services that protect people’s privacy online.

"Ultimately, when we talk about privacy online, we’re talking about invisible data," said Brian Kennish, co-founder of Disconnect, a year-old startup that creates software that prevents sites from collecting data about its visitors. "When big guys like Google do things [with privacy] in a big way, they’re bringing privacy to a lot of people’s attention. We see a snowball effect and it puts privacy issues in more visible terms."

Less than a year after Google settled with the Federal Trade Commission over charges that it used "deceptive privacy practices" when it launched Buzz, the search giant is once again under scrutiny over its handling of user data. In January, Google announced plans to revamp its privacy policies in such a way that would allow the company to consolidate the information it collects about users across multiple services, a move that has troubled privacy advocates and brought tough questions from congress. The Wall Street Journal then revealed last week that Google had quietly tracked users’ habits online by sidestepping privacy safeguards on Apple’s Safari web browser. Though Google halted the practice after the Journal’s exposé, lawmakers have asked the FTC to investigate.

A subset of tech companies are turning Google’s privacy pain into their gain. These firms have embraced the recent firestorm surrounding Google’s use of personal information as an opportunity to gain users, undermine Google and pitch themselves as the privacy-friendly alternative to it. Even Microsoft, once eschewed by much of the tech world as an "evil empire," is using Google’s troubles to tout itself as a champion of privacy and personal data.

The benefits some privacy-focused Silicon Valley firms have reaped from the backlash against Google's data policies suggest online privacy may be taking on greater significance for users, evolving from one feature among many to something that gives companies a strategic advantage to wield against their competitors.

"Just as online business models are growing up, so is the sense of how online companies manage privacy,” said Trevor Hughes, CEO of the International Association of Privacy Professionals, or IAPP, a professional association for privacy practitioners. “Businesses are taking notice of the fact that consumers are demanding more and, perhaps most importantly, regulators, class action attorneys, and enforcement agencies are coming after bad actors in a very, very significant way."

Hughes notes that the IAPP’s membership has grown from 7,500 privacy professionals in December 2010 to almost 10,000, nearly a quarter of whom are from the tech industry. And users aren't just talking about protecting their privacy -- they're increasingly taking action. A recent study by the Polytechnic Institute of New York University found that the share of Facebook users employing privacy settings to wall-off their profile information from prying eyes more than doubled over a 12-month span: In 2010, 12 percent of the 1.4 million Facebook users the researchers sampled had opted to protect details on their profiles, while a year later, 33 percent had chosen to do so.

Given that Google is now a household name and indispensable tool for millions of people online, each wave of criticism concerning its privacy policies makes users more wary of the ways companies -- and Google, in particular -- are tracking them online, experts say.

That’s good news for entrepreneurs like Kennish, who says Google’s privacy controversies have been a boon for business.

Visits to Disconnect’s website jumped 73 percent last October after Google finalized its privacy settlement with the FTC and increased 161 percent the week after Google unveiled its unified privacy policy in January, he said.

Several other startups report that activity on their sites skyrocketed in the wake of outcry over Google’s approach to personal data.

Abine, which provides software to help people manage their data online, reports that downloads of its Do Not Track Plus tool peaked between February 18 and 21. The Wall Street Journal’s story about Google’s illicit tracking was published on February 17.

“Google’s privacy issues have definitely been good for business from what I can see,” said Sarah Downey, a privacy analyst at Abine.

DuckDuckGo, a four year-old “privacy first” search engine that boasts it does not collect data about its users, has also seen significant growth over the past several weeks. Since the beginning of this year, queries on DuckDuckGo have more than tripled from 393,933 per day to over 1.2 million, an increase founder Gabriel Weinberg attributes both to his site’s recent redesign and users’ dissatisfaction with Google.

“When they [Google] do something like the Search Plus Your World [search personalization] or privacy changes, they’re just making us more differentiated without us having to do anything,” said Weinberg. “It creates more of an obvious difference between us and them, and makes us more compelling for some people.”

Microsoft, which has numerous products that compete directly with Google’s offerings, has been one of the companies most eager to capitalize on the criticism of Google, even publishing its own exposé about the way in which Google allegedly bypassed Internet Explorer’s privacy settings. And several days after Google announced changes to its privacy policy, Microsoft launched the Silicon Valley version of a political attack ad: an aggressive campaign marketing Microsoft as the secure alternative to a snooping, spying and all-seeing Google.

In a full-page ad that ran in the Wall Street Journal, The New York Times and USA Today earlier this month, Microsoft argued that Google was “making it harder for you to maintain control of your personal information” and positioned Microsoft’s products as privacy-rich tools built to help users, not benefit advertisers.

Microsoft also released a video that features an unnerving “Gmail Man” delivery man who paws through personal letters and cackles at people’s privacy complaints. The clip includes a song with lyrics such as, “His favorite game is peekaboo/ His ads are unsolicited based on what you type/ Makes you wanna ditch email and go Office 365.” Google did not respond to a request for comment about the ads.

Frank Shaw, Microsoft’s vice president of corporate communications, said that while privacy has always been a priority for Microsoft, the recent concern over Google’s policies has offered Microsoft the chance to be “louder” in explaining to users the type of data protection their products offer that Google’s do not.

“We have more overlap with Google than almost any company does and we’re more differentiated there [on privacy],” said Shaw. “The reason we did these ads is that there’s been a fair amount of coverage about Google’s decision to change its privacy policies, and people were upset about it and looking for alternatives. We said, ‘Hey, we’ve got alternatives,’ and we want to be sure that people think about us in that way.”

The campaign, together with the spike in traffic these startups reported, highlights the possibility that tech companies’ attitude toward privacy may be forced to evolve from “do no evil” to “do good” as users become increasingly conscious of the ways in which their data is being used. Safeguarding data from hackers’ prying eyes may not enough. Instead, a firm’s stance on privacy could become a competitive differentiator and one of the most important features distinguishing certain services from others.

Brian Blau, an analyst with the technology research firm Gartner, predicts consumer demand for better privacy protections online will only grow louder. He notes that web firms’ current crop of privacy tools are too arcane and complex to be useful, but says users may ultimately push web firms to deliver features that are more comprehensive and intuitive.

“These privacy issues will come more to the forefront and users will become more vocal about it,” said Blau. “Users will demand from tech providers that they get better value out of the data they share, but they’re also going to demand easier to use privacy controls and more controls over their privacy."

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