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The company responded to a request for proposals from the Federal Trade Commission about Internet privacy with a five-tiered approach to self-regulating protection of consumer privacy.

Few businesses desire extra government involvement in their day to day business. Several industries may merit that additional oversight, but none particularly wish to invite it in, like some kind of ominous vampire.

Online advertising enjoys a relatively unencumbered business model, so long as they do not actively do malicious things with customer data. Outside authorities would be able to step in should such actions take place, something ad companies do not want in any scenario.

To head off the potential for government interference, Microsoft submitted a filing with the FTC detailing their approach to a privacy protecting mechanism, one that leaves the industry in a self-regulating state. Brad Smith, Microsoft's senior general counsel, commented in a statement:

"We welcome the opportunity to work with the FTC to ensure that online consumers benefit from meaningful privacy protections," said Brad Smith, senior vice president, general counsel and corporate secretary, Legal & Corporate Affairs, Microsoft. "Online advertising should put consumers in the driver’s seat, not only with the information they want to see, but also with the tools to protect their privacy."

Microsoft detailed their five tiers in the filing:

In its comments to the agency, Microsoft called for a five-tiered framework that imposes increasing obligations depending on the type of advertising involved:
• Collecting data about site visitors. Organizations that keep records of page views or collect other information about consumers for the purpose of delivering ads or ad-related services on their own sites should post a privacy policy on the home page, implement reasonable security procedures, and retain data only as long as necessary to fulfill a legitimate business need or as required by law.
• Delivering ads on unrelated sites. Entities that engage in delivering online ads or services across unrelated third-party sites should ensure that consumers receive notice of the privacy practices of those sites.
• Behavioral advertising. Entities that seek to develop a profile of consumer activity to deliver advertising across unrelated third-party sites should also offer consumers a choice about the use of their information for such purposes.
• Use of personally identifiable information. Third parties that rely on personally identifiable information - such as a name, e-mail address, physical address or phone number — for delivering ads or related services across multiple sites or for behavioral advertising should, at a minimum, give consumers the ability to opt out of having personally identifiable information collected for the purpose of targeting ads.
• Use of sensitive personal data. Third parties should be required to obtain affirmative express consent before using sensitive personally identifiable information - such as health or medical conditions, sexual behavior or orientation, or religious beliefs - for behavioral advertising.

The move gives Microsoft some positive PR going into the weekend. They rendered Internet advertising privacy needs down to a few distinct bullet points, which should be easily understood by the FTC's decision-makers.