Microsoft Corp. said this week that the next version of Internet Explorer will feature options that allow users to block third-party web sites from tracking their browsing behavior. Internet Explorer 9 is expected to debut next year.

The company says the new Tracking Protection setting is Microsoft’s attempt to strike a balance between the benefits consumers get from sharing their information and their desire for privacy and control.

When IE9 debuts, consumers will be able to create tracking protection lists that would block web sites from sharing browsing behavior data with third parties that may also provide content on the web site, such as videos, advertisements and links for social sharing.

Web sites often feed outside content onto their sites and allow those content providers to use cookies or other tracking devices to accumulate information on visitors’ browsing behavior. These content providers, such as ad networks, then use the data to provide more targeted ads to consumers. Microsoft’s Tracking Protection mechanism does not prevent sites that consumers visit directly, including retailer sites, from collecting data.

“Consumers understand that they have a relationship with the site they visit directly, whose address is clearly visible to them,” says Microsoft chief privacy strategist Peter Cullen. “The modern web though means that web sites include content from many other sites as well. These sites are in position to potentially track consumers, via cookies and other technology mechanisms. This creates a potential trade-off for those consumers with privacy concerns.”

Online privacy has become a hot topic in Washington. Last week, the Federal Trade Commission released a report that proposed consumers should be able to easily opt out of tracking methods that permit advertisers to gather information for ad-targeting purposes. The Interactive Advertising Bureau trade group expressed concern about the FTC’s proposal and says the new Internet Explorer 9 function may block advertisements that supply revenue to web publishers and allow for consumers to get free content.

Lorrie Faith Cranor, an associate professor of computer science and engineering at Carnegie Mellon University who researches online privacy and usability issues, says the Tracking Protection function is a step forward for the industry because consumers will be able to get anti-tracking functionality right from their browsers and not have to download it from other services. She also says ad networks will probably respond by separating their tracking functions from their ads so that ads aren’t blocked. She notes that the Tracking Protection does not apply to sites that consumers visit directly.

“I suspect we will see new approaches to tracking through first-party mechanisms, which will not be blocked by this,” she says.

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