Facebook Inc (FB), Yahoo! Inc. (YHOO): Limiting Online Advertising Could Hammer These Companies

In an interesting development, and one I don’t think has garnered enough attention from the tech world, browser-developer Mozilla, which makes the browser Firefox, is testing a browser that will provide a much greater set of controls on how the websites you visit can track your activities.

We’ve all heard the jokes about how the first thing you should have people do after you’ve been killed is to erase your browser history, sure. But what if you didn’t have to? What if you used a browser that was so locked down that you couldn’t be casually tracked? Right now, about 20% of the world’s Internet users are working with Firefox (Disclaimer: I am a Firefox user, though not a militant one.) and the fact that Firefox is considering controlling company’s access to your information is alarming to those that rely on it.

More alarming to those companies is the fact that the administration is playing along. The Obama administration has an initiative called “Do Not Track” that is designed to increase people’s ability to protect their privacy from online tracking. That plan has been stalled by an inability of the administration and the industry to agree on exactly what constitutes tracking in any sense. No surprise there.

Still, the move by Mozilla to test a cookie-free (or nearly so) browser is considered a very aggressive move by the trade group Internet Advertising Bureau (you can see a list of the membership here). One official from the IAB said that the move is a “nuclear first strike” against those who make money through online advertising. There’s real money at stake, here.

Facebook Inc (NASDAQ:FB)

On its own site, Facebook says that it uses cookies to enable certain features, personalize your experience and improve the ads you see as you use the site. This is a company that has already had trouble showing a profit and maintaining a non-crazy P/E. Suddenly hitting it where it lives–in its ability to track the places its ads should go–would damage it. I’m bearish on Facebook Inc (NASDAQ:FB) already; if this goes through and spreads I wouldn’t be anywhere near it.

Google Inc (NASDAQ:GOOG)

Google is an interesting case. Not only does it use cookies but it also has its own browser out there, Chrome. If that tells me anything, it tells me that Chrome won’t join the ranks of browsers abandoning the use of cookies unless people absolutely desert it. Even then, Google will have an out by requiring the hordes of Gmail, Google+ and such users to consent to being tracked to use those free services. You didn’t really think the company was providing all of those out of the goodness of its heart, did you? Still, Google will continue to do well even in the face of a cookie-less Internet future.