SAN FRANCISCO (AFP) - America Online (AOL) is following the leads of rivals Google and Microsoft by buying a firm specializing in tailoring Internet ads to the tastes or interests of website visitors.
AOL announced Tuesday that it is acquiring TACODA, a New York City start-up that uses "behavioral targeting" to calculate which online ads are most likely to result in money-making "clicks" by respective Internet users.
Financial terms of the deal were not disclosed.
AOL, a subsidiary of media colossus Time Warner, is making the acquisition as competition in the multi-billion dollar online advertising arena intensifies.
Google is expanding its online advertising empire to video and graphics realms with the purchase of ad-targeting powerhouse DoubleClick and Microsoft is trying to keep pace by buying aQuantive Inc.
Yahoo bolstered its position by taking over online advertising exchange Right Media.
TACODA was founded in 2001 and has "patent-pending technologies ... to target relevant messages to specific audience segments," according to AOL.
Internet search titans gobbling up ad-targeting firms has privacy advocates worried it will result in storehouses of information about people's online activities that could be plundered by governments or profiteers.
Ad-targeting firms commonly collect data about people Internet use to figure out which pitches to display on web pages.
Google announced this month that it is shortening the lives of software "cookies" used to track users' online preferences.
In coming months Google will begin issuing cookies that automatically expire two years after a person visits the website provided they don't return, according to the US firm's global privacy counsel Peter Fleischer.
Cookies previously installed on computers by Google are made to expire in 2038.
Microsoft and Internet search rival Ask.com said this week they are bolstering online privacy and calling for a tech industry summit devoted to that goal.
"We have been thinking deeply about privacy related to search and online advertising and believe it is critical to evolve our privacy principles," Microsoft chief privacy strategist Peter Cullen said.
"For instance, on search data, anonymous should mean anonymous."
Microsoft and Ask.com are inviting Google, Yahoo and AOL to join in a forum devoted to creating standards of privacy for users.