Apple has included a "do not track" feature to its Safari web browser that will block advertisers and other websites from tracking a user's surfing habits, according to a report.

The feature hasn't been rolled out to the public yet, but it has been added to Safari in the latest release of Apple's in-development operating system, Mac OS X Lion, which is currently only available for now to Apple-certified programmers, according to a report from the Wall Street Journal.

Apple officials were unavailable for comment on the report Wednesday afternoon.

Mac OS X Lion, and an updated version of Safari along with it, are set to be released this Summer. Apple has said Lion will include many new features that will bring its user experience a bit closer to that of its iOS operating system, which runs on the iPad, iPhone and iPod Touch.

Mozilla's Firefox 4 and Microsoft's Internet Explorer 9, two other popular Web browsers, already have similar "do not track" features.

So far, Google's Chrome browser has yet to add such a consumer tool, but third-party plug-ins have been created and are free for download online and Google has promised such a feature will come soon.

In February, Rep. Jackie Speier (D-Calif.) introduced a bill into Congress that would create a law giving the Federal Trade Commission to right to create regulations that would force online advertisers to not record a consumer's online behavior if that person doesn't want to be tracked, similar to the Do Not Call Registry created in 2003.

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-- Nathan Olivarez-Giles

twitter.com/nateog

Photo: The blue compass icon for Apple's Safari browser is displayed in the dock of an Apple computer running an older version of Mac OS X. Credit: aditza121 via Flickr

Two leading U.S. senators introduced bipartisan privacy legislation Tuesday to safeguard consumer information online, aiming to prevent the misuse of personal data while not squelching the advertising that fuels the Internet economy.

Sens. John Kerry (D-Mass.) and John McCain (R-Ariz.), who both have a history of working on technology issues, said their Commercial Privacy Bill of Rights would protect Americans' personal information as it is increasingly shared between online companies.

"Right now there is no law protecting the information that we share. Companies can harvest our personal information online and keep it for as long as they like it," Kerry told reporters in Washington. "They can sell it without asking permission, or even letting you know that they're selling your own information. You shouldn't have to be a computer genius in order to be able to opt out of information sharing."

The bill would give consumers certain rights concerning their online data, and require companies to take steps to protect the data and obtain permission to share it.

Companies that collect consumer data would have to provide clear notice on their practices.

Those would include requiring consumers to provide clear consent -- known as opt-in -- for the collection of "sensitive, personally identifiable information." Companies also would have to allow consumers either to access and correct their information or request that the information not be used or distributed.

The legislation would allow the Federal Trade Commission to approve so-called "safe-harbor" programs -- voluntary efforts that companies could design and establish on their own to comply with the legislation.

The bill also would require state attorneys general to back off on enforcing the legislation when the FTC steps in to take action against a violator. And Kerry and McCain would prohibit private lawsuits based on the law.

The senators said they were trying to strike the right balance.

"Our bill seeks to respect the ability of businesses to advertise and market and recruit new customers while also respecting consumers'[ personal information," McCain said, noting that many consumers enjoy receiving targeted advertisements and visiting websites that are free because they are supported by ads. "But consumers must have control over how their data is used when it is transferred to an unknown third party."

Kerry and McCain said that Microsoft Corp., Intel Corp. and EBay supported the bill, as did some consumer groups. The Obama administration has called for Congress to pass comprehensive online privacy legislation.

Noticeably missing from the bill is a requirement for a do-not-track mechanism in Web browsers, similar to the do-not-call list for telemarketers, that would give consumers the ability to stop companies from tracking their online movements. Kerry and McCain said they anticipated that other senators might try to add such a requirement, but they felt the opt-in requirements on companies were sufficient to protect consumer information.

In a letter to the senators, five consumer groups said they welcomed the new legislation, one of several privacy bills introduced or expected this year. But they said the Kerry/McCain legislation was "insufficient" to protect consumers and needed to be strengthened.

"We strongly believe that any privacy bill should direct the Federal Trade Commission to
require and enforce a 'Do Not Track Me' mechanism," said the letter from Consumer Watchdog, the Center for Digital Democracy, Consumer Action, Privacy Rights Clearinghouse and Privacy Times. "Consumers should have the right to use the Internet and mobile devices with confidence that their privacy choices are respected, and with anonymity if they choose."

-- Jim Puzzanghera in Washington

Photo: Sens. John Kerry, left, and John McCain discuss their online privacy legislation. Credit: European Pressphoto Agency

Amazon is cutting the entry price of the Kindle by $25 -- but it'll cost readers in the form of on-screen ads which they can vote on as "attractive" or not.

The Seattle-based online retail and e-reader giant announced its lower-priced Kindle, dubbed Kindle with Special Offers, on Monday.

The ad-running reader will sell for $114 and start shipping May 3. The regular Kindle, free of advertisement, sells for $139 or $189 with free 3G wireless service.

Ads will display on the Kindle with Special Offers only in a strip across the bottom of the home screen or as a screen saver when the device isn't in use, and thus never interrupt reading, Amazon Chief Executive Jeff Bezos said in a statement.

"Companies sponsor the screen savers, you pay less for your Kindle," Bezos said."Plus, you receive offers directly on your Kindle that can save you more money, such as a $20 Amazon gift card for $10, six Audible books for $6 and an album from the Amazon mp3 store for $1."

Buick, Chase, Olay and Visa are among the initial companies running ads on Kindle with Special Offers readers.

Amazon is also looking to enroll readers' help in choosing which screensaver ads are displayed by making available a Kindle app where users can vote on which ads they prefer, Bezos said.

The ad-voting app is called AdMash, which sounds a bit like and will work similarly to Facemash, the Mark Zuckerberg-built precursor to Facebook, which showed users photos of two Harvard women and had them vote on which was more attractive.

"Anyone who's interested can download AdMash and help pick future screen savers," Bezos said. "Two prospective screen savers show up side by side, and you pick the one you find the most attractive. The ones preferred most by customers qualify to become sponsored screen savers."

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twitter.com/nateog

Image: A screen shot of Amazon.com's page announcing the Kindle With Special Offers.

Customer data at Best Buy, Capital One, Citi, JPMorgan Chase, US Bank, TiVo and Walgreens -- all managed by Epsilon, an online marketing company -- were accessed by hackers last weekend.

The affected companies have sent emails to their customers warning them of the security breach, with Best Buy saying in an email: "On March 31, we were informed by Epsilon, a company we use to send emails to our customers, that files containing the email addresses of some Best Buy customers were accessed without authorization," wrote Barry Judge, Best Buy's chief marketing officer.

"We have been assured by Epsilon that the only information that may have been obtained was your email address and that the accessed files did not include any other information. A rigorous assessment by Epsilon determined that no other information is at risk. We are actively investigating to confirm this."

Best Buy and others warned customers to remain alert to unusual or suspicious emails.

"In keeping with best industry security practices, Best Buy will never ask you to provide or confirm any information, including credit card numbers, unless you are on our secure e-commerce site, www.bestbuy.com," Judge wrote. "If you receive an email asking for personal information, delete it. It did not come from Best Buy."

JPMorgan Chase issued a statement on the hack, saying, "We are advised by Epsilon that the files that were accessed did not include any customer financial information, but are actively investigating to confirm this. As always, we are advising our customers of everything we know as we know it. Chase will never ask customers for personal information or credentials in an email."

In a statement on its website, Epsilon said the incident took place on March 30 when "a subset of Epsilon clients' customer data were exposed by an unauthorized entry into Epsilon's email system. The information that was obtained was limited to email addresses and/or customer names only. A rigorous assessment determined that no other personal identifiable information associated with those names was at risk."

Epsilon officials were unavailable for comment on the hack on Monday.

Based in Dallas, Epsilon sends more than 40 billion emails each year and has more than 2,500 clients, according to a report from Security Week.

The company said it was still investigating the security breach. A list of the affected companies, as reported by Security Week:

• Ameriprise Financial
• Best Buy
• Brookstone
• Capital One
• Citi
• Disney Destinations
• Home Shopping Network
• JPMorgan Chase
• Kroger
• LL Bean Visa Card
• Marriott Rewards
• McKinsey & Company
• New York & Company
• Ritz-Carlton Rewards
• TiVo
• The College Board
• US Bank

[Updated at 1:27 p.m.: Epsilon spokeswoman Jessica Simon said the company wasn't speaking on the hacking outside of the statement on its website, which is quoted in the above post.]

[Updated at 2:52 p.m.: The Associated Press released an update list of the companies affected by the recent Epsilon hack. The AP's list included a few companies not previously noted, as seen below:

• Amazon.com's AbeBooks subsidiary
• Barclays Bank and U.S. customers of Barclaycard
• Ethan Allen Interiors
• Hilton Worldwide: inclusing Hilton, DoubleTree, Hampton Inn and Waldolf Astoria
• HSN Inc., a retail offshoot of the Home Shopping Network]

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-- Nathan Olivarez-Giles

twitter.com/nateog

Groupon is being accused of running "false and misleading business and advertising acts" and running "bait and switch" ads on Google.com, according to a lawsuit filed by a bus tour company in San Francisco.

In the complaint, which was filed in a San Francisco district court, San Francisco Comprehensive Tours argues that Groupon has found a way to unlawfully manipulate Google's AdWords advertising system that pairs text ads from companies with related search results on Google.com.

From the lawsuit:

Beginning in about September of 2010, Plaintiff (San Francisco Comprehensive Tours) observed that the cost of its click-throughs began to skyrocket, and its ranking in the purchased placement area for searches including the terms "San Francisco Tours," "Alcatraz Tours," and "Napa Wine Tours" began to decline. At the same time, defendant Groupon's AdWords link began to appear at or near the top of purchased placement search results for Google searches including the terms "San Francisco Tours," "Alcatraz Tours," and "Napa Wine Tours"

The tour company said in its complaint that, to its knowledge, Groupon only offered a single coupon on its group-discount buying Website that had to do with San Francisco and tours during since September of last year.

The reason Groupon was dominating the Google AdWords traffic for the selected San Francisco tour related search queries, is because it was running text ads that mentioned tour discounts it didn't offer, San Francisco Comprehensive Tours said in its lawsuit.

The tour company said in the suit that AdWords ads from Groupon would advertise "Napa at 50-90% off," with similar claims for San Francisco and Alcatraz, but a click-through would lead to no landing pages that offered such discounts.

Officials at Groupon, based in Chicago, could not be reached for comment on the suit and the claims of San Francisco Comprehensive Tours on Wednesday afternoon.

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-- Nathan Olivarez-Giles

twitter.com/nateog

Photos: Groupon signage is displayed on the entrance to the company's headquarters in Chicago on Dec. 14, 2010. Credit: Tim Boyle / Bloomberg

Skype said Monday that it has opened its apps up to ads.

"Today we announce something new -– the launch of advertising in Skype, which will appear in the Home tab in Skype starting this week," Doug Bewsher, Skype's chief marketing officer, said in a company blog post. "The Skype experience is our first priority, which is why we we've taken a lot of time working through and testing what kind of advertising would work best in the Skype environment."

Skype has run test ads from Rdio over the last "month or two," and the first official advertisements inside of Skype will start running sometime this week, Bewsher said.

"As we roll out ads on a wider basis, we expect to continue to test and learn a lot more, and make any necessary adjustments along the way," he said. "We believe that advertising, when done in the right way, will help us continue to invest in developing great products."

The first ads purchased in the Luxembourg-based company's Internet calling service, will come from Groupon, Universal Pictures and Visa, Bewsher said.

"Ads will appear in the U.S., U.K. and Germany, and advertising sales for Skype are initially focused in those markets," Bewsher said. "You may only see ads occasionally. Our initial plan is to show an ad from one brand per day in each of the markets where advertising is being sold."

As of now, ads will only show up in the Home tab in Skype's application on Microsoft Windows, though the company will be experimenting with ads in other areas and versions of its apps as well, he said.

Skype is promising no "annoying pop-up ads or flashy banner ads in middle of conversations," and it will use "non-personally identifiable demographic data," such as a caller's location, gender and age, to target ads to users who are more likely to find them to be relevant, Bewsher said.

Users can also opt out of allowing Skype to share such demographic data with its advertisers, which can be done in the Windows app's Privacy tab under Tools and then Options, he said.

Skype, which has about 145 million monthly users, told the Associated Press that ads in its applications can be purchased through companies such as Meebo in the U.S., Ad2One in Britain and Ströer Interactive in Germany.

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-- Nathan Olivarez-Giles

twitter.com/nateog

Image: A Visa advertisement in Skype for Microsoft Windows. Credit: Skype

The first "do not track" legislation was introduced in Congress on Friday, raising the possibility that Web users will be able to prevent advertisers from recording their online behavior for marketing purposes, similar to the Do Not Call Registry created in 2003.

The bill, called the "Do Not Track Me Online Act of 2011," would give the Federal Trade Commission the right to create regulations that would force online marketers to respect the wishes of users who did not want to be tracked.

"Failure to do so would be considered an unfair or deceptive act punishable by law," noted a statement from the office of Rep. Jackie Speier (D-Calif.), who is sponsoring the bill.

Speier also introduced a second bill that would enable consumers to better control financial information collected about them by banks and other institutions. That bill includes a provision that would prevent companies from sharing consumer financial information without explicit pre-approval from the consumer, a process known as opting in.

“These two bills send a clear message — privacy over profit,” Speier said in a statement. “Consumers have a right to determine what if any of their information is shared with big corporations, and the federal government must have the authority and tools to enforce reasonable protections.”

In recent weeks, several browser-makers have said they will add mechanisms that make it more difficult for advertisers to track user behavior.

Google’s Chrome, Firefox and Microsoft’s newer Internet Explorer 9 will have some protections built in, but critics say those features are not always easy for the average user to operate, nor do they block every type of tracking.

In December, the FTC released a report urging for stronger online privacy controls, including a Do Not Track mechanism. The Commerce Department also recommended stronger controls, but stopped short of recommending legislation.

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-- David Sarno [follow]

Photo credit: Anemoneprojectors / Flickr

Facebook's new Sponsored Stories feature will allow companies to take any user content -- such as status updates, Facebook application use, or Places check-ins -- and turn that content into an advertisement for its products on the social networking website.

The social media giant announced the new feature for advertisers in an "Introducing Sponsored Stories" video posted on its website at about midnight last night.

Facebook representatives weren't available Tuesday afternoon to comment on the advertising feature, but in the video, Kent, a Facebook product manager going by first name only, described it as follows:

All of us aren't out there trying to market ourselves or trying to influence people to go somewhere or do something. But, the reality is, when we make a decision, we're looking for information and we want that information to come from people we trust.

Phil, a Facebook engineer also identified only by his first name, added:

The sponsored stories, what they let advertisers do is take these word of mouth recommendations and promote them.

Phil then gives a hypothetical example of how a company will use user content to advertise itself:

So my friend Joe goes and he checks into Starbucks. That will appear on my news feed and I may or may not see it.

And what we've seen is that a lot of impressions do get lost because there is so much content coming through.

Starbucks can come in and say, 'I want to promote check-ins to our locations.' So, when I come to the site I see the story that my friend checked into Starbucks. Now I can click through, I can like the starbucks page from that story and when I like that page it creates more organic content.

In the video, Kent also said:

Anything that one of your friends is seeing as a sponsored story, which features some of your content, is actually something they would have already seen in their news feed. A sponsored story never goes to somebody who's not one of your friends.

Facebook did not say in the video when the Sponsored Stories ability for companies would go into effect, but it is highly likely that advertisers will take this feature.

The world's most popular social networking website has recently been under scrutiny for allowing Facebook app developers and external websites access to user information such as phone numbers and addresses.

After one day, Facebook backpedaled on the decision, rescinding the access, but has said it plans to allow developers and websites access to the personal data again soon.

[Updated 6:05 p.m.: Cyndi Schott, a Facebook spokeswoman, said Sponsored Stories went into effect on Tuesday.]

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-- Nathan Olivarez-Giles

twitter.com/nateog

Video credit: Facebook via YouTube

Twitter may triple its advertising revenue to $150 million in 2011 as more companies turn to the growing social media website to market their products, according to a report from EMarketer Inc.

And by the end of 2012, Twitter ad sales could hit $250 million, EMarketer analyst Debra Aho Williamson said in the report.

Twitter introduced its advertising program last April and has pulled in major ad campaigns from major companies such as Mercedes-Benz, Pepsi, Starbucks and Disney.

Last year, the San Francisco micro-blogging site brought in about $45 million in advertising revenue, the report said.

By comparison, Facebook brought in more about $1.8 billion in ad sales, EMarketer said. The research firm expects Facebook's ad numbers to grow hugely as well: It projects about $4 billion in ad revenue in 2011 and about $5 billion in 2012.

Twitter has more than 175 million users worldwide and will have to increase its user base substantially before being able to compete with Internet advertising heavyweights Google and Facebook, which is also the leading social networking website. Facebook says it has amassed 600 million users.

Williamson noted that a December report from the Pew Research Center said only about 8% of Internet consumers in the U.S. use Twitter, which is relatively low compared with Facebook's and Google's numbers.

"If Twitter can grow its user base and convince marketers of its value as a go-to secondary player to Facebook, it will succeed in gaining revenue," she said. "In 2011 it must work overtime to give its early advertisers a positive experience."

Twitter's monetization efforts will go into "full gear" this year on the popularity of its current Promoted tweets and trends and on the upcoming launch of a platform similar to Facebook's that will let companies target their ads at specific user groups, she wrote.

The micro-blogging site won't pass Facebook in terms of revenue anytime soon, but it should pass MySpace by 2012, the report said. MySpace pulled in about $288 million in ad revenue last year, EMarketer said.

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Photo: A Malaysian girl logs in to her Twitter account in Kuala Lumpur in October. Credit: Saeed Khan / AFP/Getty Images

Perfect Market Inc, a start-up that seeks to help news organizations make more money through online advertising, has won $9 million in new funding in a round led by Comcast Interactive Capital, the cable giant's venture arm.

This is the fourth capital infusion for the Pasadena company since it was seeded with $1 million by Pasadena start-up incubator Idealab in May 2007. Perfect Market has now raised $28.1 million from a variety of sources, including venture companies Trinity Ventures and Rustic Canyon Partners. In 2010, the Los Angeles Times' parent company, Tribune Co., led a $6-million investment round.

“The substantial support we’ve received from investors to date affirms Perfect Market’s mission," said Perfect Market Chief Executive Julie Schoenfeld in a statement. The company, she said, was looking to "satisfy a gap in finding new monetization opportunities for leading Web properties in the ever-expanding online advertising marketplace.”

Counting among its clients 30 national news sites -- including latimes.com -- Perfect Market evaluates the often voluminous archives of large news organizations to determine which pieces of its older content might be most profitably brought to the surface -- and paired with ads. The company works with Hearst Corp., the Orange County Register and an NBC-owned site, among others.