Consumer Trust in the Web Isn’t for Sale

We all know by now that Microsoft (Nasdaq: MSFT) isprone to tyrannical bouts of imperialism. A fewcursory wrist slaps from the Feds won’t change that.

But the software Goliath’s latest bid for worlddomination defies logic. Veiled as a holidaypromotion for its .NET Passport service, Microsoftis trying to purchase consumer trust en masse.

Through December 20th, shoppers who use PassportExpress Purchase will receive a US$20 kickback foreach $100 spent, for up to a maximum of $100 in rebates.

What Microsoft fails to realize is that consumer trust is a fragile and invaluable entity, and not acommodity to be bought and sold.

Personal Goals

The .NET Passport represents Microsoft’s early stab atcontrolling the next phase of e-commerce. It is acentralized user authentication system — or singlesign-on — that stores personal profile information tobe shared with multiple online merchants.

The next generation of e-commerce, say analysts andvendors, will subsist on a network of deeplyintegrated, distributed software applications, wherebyconsumers will conduct sequences of relatedtransactions with multiple merchants.

This post-Web world has earned such buzz words as XInternet, Web services, meta-services, peer-to-peer,and federated commerce.

Regardless of its industry-ordained moniker, this newboundary-blurring form of e-commerce will placeunprecedented demands on consumer trust. Userinformation will be managed and shared in ways yet to be fully defined.

Hide or Confide?

Microsoft wants to function as the gatekeeper to thisbrave new world, by serving as the main repository foruser profile information. Its .NET Passport is stepone toward this goal.

To take advantage of Passport Express Purchase, usersmust hand over credit card and billing addressinformation. When making a purchase at any of some 75partner sites, Passport users can pay the merchantwith their “wallet,” without re-entering payment information.

There’s just one small problem. You have to bringyourself to trust Microsoft with your credit cardnumber. How has Microsoft chosen to earn this trust?

Rebate checks.

In Rebates They Trust

Heads up, Mr. Gates: Consumers won’t bite. According to Jupiter Media Metrix, 36percent of online consumers do not trust any singlecompany to store their personal data, let alone trust Microsoft to do so across the board.

In fact, just 3 percent would trust Microsoft withtheir identities, Jupiter said. Will $100 in rebateswin over the other 97 percent? Not a chance.

Especially not with Microsoft’s less-than-stellartrack record in the areas of security and privacy.

Checkered Past

Does Microsoft expect us to conveniently forget themajor security glitch exposed in Passport just over amonth ago? A well-meaning engineer discovered thatHotmail users’ financial data stored in theirPassports could be picked clean by enterprisinghackers.

One-time growing pain? Not so. Microsoft’ssecurity woes run deep.

How about the breach in Internet Explorer, alsodiscovered in November? User cookie files were laidbare for intruders to pilfer credit card numbers,usernames and passwords. What’s worse, Microsoft apparently lied about when it first learned of the software flaw.

Time and again, Microsoft proves that it lives bymarket share, at the expense of user privacy. Thecompany cannot erase this reputation by offering a token handout to consumers.

Liberty for All

If not Microsoft, then who? Who deserves to win thebattle of trust?

While it’s clear that next-generatione-commerce depends on the secure storage andtransmission of consumer profile data, it’s far fromclear how this will be administered.

My hopes are high for the Liberty AllianceProject, founded in September by Sun Microsystems(Nasdaq: SUNW) and backed by trusted financialinstitutions like Bank of America (NYSE: BAC) andAmerican Express (NYSE: AXP).

Still young and very secretive, the Liberty Allianceis a consortium of companies touting a “federatedsolution” to the online identity crisis. The groupposits that a person’s online identity should beadministered only by the user, decentrallyauthenticated, and securely shared with organizationschosen by the user.

Can’t Beat ‘Em

At this early stage, the Alliance is long on theoryand short on practice. But a federation of tradingpartners, in whose collective interest it is tomaintain user privacy, stands to earn a greater shareof consumer trust than a single company with purelycapitalistic intentions.

In fact, Microsoft’s best chance of regainingconsumer trust may be to join the Liberty Alliance.

Short-sighted incentive offers won’t do the trick.

What do you think? Let’s talk about it.