Much to the chagrin of the Association of National Advertisers, Microsoft today announced that it will embed ‘Do Not Track’ functionality in version 10 of its Internet Explorer browser with a default setting in the ‘on’  position.

Doing so will force consumers to opt-in if they want their online activities to be tracked by advertisers and marketing companies that would use the information to deliver targeted content to them.

The new feature went live along with Windows 8′s release preview on Friday. IE10 will be the featured browser on Windows 8, which is expected to be released to the general public this fall.

“This decision reflects our commitment to providing Windows customers an experience that is ‘private by default’ in an era when so much user data is collected online,” said Dean Hachamovitch, head of Internet Explorer, in a blog post late Thursday.

“We think it is progress and that consumers will favor products designed with their privacy in mind over products that are designed primarily to gather their data,” Hachamovitch added.

Though the feature is available on other browsers, such as Google Chrome and Mozilla Firefox, Microsoft is the first to make users actively turn it on, thereby agreeing to allow their activities to be tracked. The status quo has always been an opt-out.

Microsoft is making a bold move in doing this, and others will certainly notice given Internet Explorer’s large size.  It could also severely disrupt advertisers’ ability to provide personalized, targeted ads.

At least the ANA seems to think so. In a statement the organization released Friday, it said the move by Microsoft does the following:

• Harms marketers’ effectiveness and productivity in reaching consumers and customers;
• Elevates the cost of business for all marketers wanting to leverage the Internet as an innovative business platform and consumer/customer communications channel;
• Removes choice by preventing consumers from experiencing interest-based advertising and making an informed decision about its benefits, the result of which will be untargeted, irrelevant online advertising; and
• Undercuts the highly effective self-regulatory program developed over the past three and a half years by the Digital Advertising Alliance (DAA).

Bob Liodice, president and CEO of the ANA, said Microsoft ” acted irresponsibly through its unilateral action,” making the decision without industry discussion or consensus.

He further maintains that the decision “undercuts years of tireless, collaborative efforts across the business community,” and requested that Microsoft reconfigure IE 10 to contain a default ‘off’ browser setting for its ‘Do Not Track’ function.

“This change in mode will provide consumers a real choice as to whether they do or do not want tailored advertising, the information to make a reasoned choice, and therefore will be consumer empowering.  We reject efforts by any provider or other group to unilaterally impose choices on the consumer in this critical area of the economy.”

But some industry insiders have speculated that Microsoft might have ulterior motives in mind. Though Internet Explorer is still the largest Web browser by market share, claiming 54 percent of the market, it has been on the decline for years, losing ground to Google Chrome in particular. The speculation is that Microsoft could be playing on consumers’ fears and concerns about online privacy to win back some of the share it’s lost.