Microsoft became one of the good guys earlier this year when they said that Internet Explorer 10 would have the “Do Not Track” option set to on by default. In a perfect world, it would tell online advertisers that a user doesn’t want their browsing activity monitored for advertising purposes. It probably won’t work, but it’s the thought that counts. Anyway, you can imagine the response such a decision received from the online ad industry.

The online ad industry was never a fan of “Do Not Track,” and they don’t intend to ever be a fan. In fact, the Association of National Advertisers wrote a letter to Microsoft CEO Steve Ballmer saying that “Do Not Track’ was “unacceptable.” Since that letter, Microsoft has not backed down from its commitment to the setting. Online advertisers are now going to get serious.

According to Ad Age, the Digital Advertising Alliance issued a statement yesterday in regards to Microsoft’s “Do Not Track” option. In short, they said that they will not honor the DNT signals sent by IE10 or any other Web browser.

“The DAA does not require companies to honor DNT signals fixed by the browser manufacturers and set by them in browsers. Specifically, it is not a DAA Principle or in any way a requirement under the DAA Program to honor a DNT signal that is automatically set in IE10 or any other browser. The Council of Better Business Bureaus and the Direct Marketing Association will not sanction or penalize companies or otherwise enforce with respect to DNT signals set on IE10 or other browsers.”

It sounds like the DAA is only targeting those browsers that have “Do Not Track” turned on by default. Firefox and Chrome both have a DNT option, but users have to turn those on manually. IE10 will be the first browser to have the option set to on by default.

So what’s next for the DAA and Microsoft now that the former has drawn a line in the sand? According to the Interactive Advertising Bureau’s SVP & General Council of Public Policy Mike Zaneis, both parties are still talking it out. The big problem right now is determining what “Do Not Track” means. Privacy advocates want the signal to stop the collection of data altogether, whereas the ad industry wants it to simply mean that advertisers can’t use targeted ads. In their world, advertisers would still be able to collect data regardless of a user’s objections.

In all honesty, the “Do Not Track” debate has become a giant mess. The ad industry in right in their assertion that nobody really knows what DNT means. There are multiple ways to implement solutions, but neither side is going to be fully satisfied with whatever comes out at the end. For now, you’re just going to have to live with targeted ads until these two sides can come to some kind of compromise.