More than a decade ago, Microsoft was branded by the United States government as a greedy monopolist and the company’s existence was threatened by an antitrust lawsuit that could have resulted in the then-world’s largest software company being broken apart.

Today, memories of Microsoft’s past may have largely faded but the Redmond company is still trying to convince consumers that it’s cool, and perhaps more importantly, that it’s on their side. One of the ways it’s doing that: declaring its support for consumer privacy.

That sounds like a fairly uncontroversial position to take, but it’s one that is proving to be problematic thanks to the company’s decision to enable a Do Not Track feature by default in the latest version of Microsoft’s flagship browser, Internet Explorer 10.

The industry, for obvious reasons, has expressed concern that Microsoft is going to make it harder for advertisers to target consumers with relevant ads. Advertisers naturally see more sophisticated targeting as a boon to their online advertising efforts and publishers believe that less targeting could lead to less revenue if advertisers are limited in how they can use user data to deliver the right ads to the right users at the right times.

Microsoft’s move has thrown the Do Not Track standard, which has still yet to be finalized, into disarray. Enabling Do Not Track by default would appear to run afoul of the proposed specification as currently written, leading some publishers, like Yahoo, to declare that they will ignore Internet Explorer’s Do Not Track setting.

Microsoft stands firm, recommends more complexity

Despite the possibility that a Do Not Track standard will collapse because of its action, Microsoft is refusing to bow to pressure from advertisers and publishers. In a blog post on Wednesday, Microsoft general counsel Brad Smith reiterated that his company is committed to its default Do Not Track settings:

Since our announcement, we’ve heard from a variety of voices about our decision. We’re listening. While we remain steadfast in our decision to enable the DNT signal in IE 10, we also recognize that turning the signal on is only the first step. To achieve the full value and benefit of DNT, the industry needs to fully implement a response to the signal.

As Microsoft continues work on its own implementation, we are committed to working with others to develop a consistent, agreed upon response so that DNT works for consumers, while giving them the choice and flexibility they say they want.

Smith goes on to suggest that, in the name of said “choice and flexibility”, Do Not Track could become a more complex proposition for consumers:

One possible implementation may be an effort already underway by the W3C to establish standards for what I’ll call a “permissions API,” a mechanism to give consumers more fine-grained control over their privacy and allow them to give specific permission to individual websites, businesses and organizations to collect information, even when DNT is on. This is a strong option, but only if the outcome respects the initial intent behind enabling the DNT signal in the first place.

Facebook privacy meets the web

On paper, “fine-grained control” sounds good. After all, when offered control and flexibility, one-size-fits-all solutions are rarely as attractive. But theory and reality aren’t always in sync and the situation with Facebook’s privacy controls is a good example of this. They too have increasingly evolved to offer more “choice and flexibility” through “fine-grained” options, but instead of making it easier for individuals to guard their privacy on Facebook, they have often created confusion.

Microsoft’s Smith says he hopes “2013 will be the year in which a self-regulatory approach to online privacy succeeds,” and laments the fact that the alternative is “a patchwork of regulations imposed by governments around the globe” that will be less effective for everyone, but one thing seems certain: complicated Do Not Track response rules and a “permissions API” are likely to impede rather than promote progress in the coming year.