Microsoft – Privacy versus Profits

Good leaders make tough decisions. They may not always be the right decisions, and usually not everyone likes those decisions, but they have to be made.

Ed Bott’s post – Good Microsoft versus Bad Microsoft – highlighted this interesting piece from the Wall Street Journal. It’s about how Microsoft decided to kill off some of the planned privacy bits (in particular what was enabled by default) in Internet Explorer 8 coming up to its release in 2009.

It’s interesting for a number of reasons:

1. It highlights how two divisions within the company had different ideas about where IE should go, and how the dollar eventually won out.
2. It shows that Microsoft IE planners were thinking strategically when it comes to improving IE. My respect for the IE planning team went way up after reading this.
3. It shows that at the end of the day Microsoft is a business, and IE is a tool foremost for building the business. You can’t make money pleasing everyone.
4. It’s shows how a decision like this is interpreted by the media and bloggers. Ed leans on the side of privacy. Others may lean on the side of profit.

Corporate Politics

The fact that there’s differences of opinion within a company shouldn’t come as any surprise of course. Nor should the fact that it became a heated internal debate – every corporate has internal politics and competition. There’s winners and losers. What’s intriguing about this little debate is how high up the chain it went:

Microsoft Chief Executive Steve Ballmer assigned two senior executives, chief research and strategy officer Craig Mundie and the general counsel, Mr. Smith, to help referee the debate, according to Peter Cullen, Microsoft’s chief privacy strategist.

Improved advertising experience

On one hand I value my privacy, and on the other I like having an improved advertising experience. The better the ads match my interests and preferences the happier I am as a consumer. And if giving up some of my privacy enables that, then perhaps there’s a good case for it.

However, it’s also important to recognise that giving up your privacy become almost inescapable. For web companies (it seems) there’s a direct correlation between reducing your customer’s privacy and increasing your advertising profits. Google gets this of course. Facebook gets this. Apple gets this (watch them carefully in the coming months as iAds takes over the iPhone advertising ecosystem…). And of course Microsoft understands the dilemma.

Privacy versus Profit

With the exception of a few stumbles Microsoft has been very good when it comes to protecting it’s customer’s privacy. However in the instance of IE and privacy there’s almost a case to be made that if Microsoft didn’t make the decision it did, then they’d be doing wrong by their shareholders.

Sometimes it’s a fine line between upsetting your customers and upsetting your shareholders.