Google Is Watching You

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Targeted Ads Rely on User Data

If the most stringent calls are heeded, more than mergers would be at risk. Over the next four years, $9.6 billion is expected to be spent on ads triggered by a user's online surfing activity, according to a June eMarketer report. While sites that feature auto reviews and fashion news would continue to attract ads, Web sites without such obvious draws would be hard hit by the loss of ads placed as a result of surfing behavior.

Many Web companies say the privacy concerns are, in many respects, overblown. After all, the information collected online is tied to a number representing a particular computer, not to a person's name or Social Security number. And the companies say they're only collecting the information to show say, a car ad, to someone who might be in the market for a car. They don't want to know someone's address, political views, or any other information that isn't tied to a potential purchase. They just want to deliver fewer untargeted ads.

There's reason for marketers to believe that people respond well to targeting. In his June report, eMarketer senior analyst David Hallerman found that users are more willing to receive ads related to things they like. "Although they are generally unaware that behavioral targeting is the cause, many consumers find ads that are systematically more relevant to their interests, preferences, or intentions to be more palatable or even welcomed," wrote Hallerman. That's not to say privacy is not a concern, he says. But it's not enough of a worry to give up free services and content. "People are used to the fact that, in order to get something for free, they will see ads," says Hallerman.

Trading Privacy for Free Service

Web companies say they are not running afoul of any privacy laws. Google, for example, says the photos for Street View don't capture anything that passersby couldn't see as well. "All the imagery is being collected on public streets…It is just like what we are seeing walking down a street," says Stephen Chau, product manager of Google Maps.

More important, many Web companies argue that consumers are not willing to sacrifice the availability of free access to services in exchange for more privacy. This year, Amobee, a Redwood City (Calif.) company that delivers ads to cell phones ran a series of trials offering consumers the option to choose between a paid download service and a free ad-supported service that would track some of their mobile Web-surfing behavior. For every consumer who paid for the content, 50 more took the free version with targeted ads.

Roger Wood, senior vice-president for Amobee's Americas region, says people born after 1975 have completely different attitudes about privacy and are more receptive to the Web's trade-offs. "Where you live, how many times a day you shop, how many girlfriends you have—they don't care about that level of privacy," says Wood.

But do younger generations care about privacy at all? Wood thinks today's teens and twentysomethings do jealously guard their thoughts and feelings. However, a scan of the Internet shows evidence to the contrary. After all, people share everything from what they ate for dinner to their political views on publicly searchable blogs. "Lifecasters" like Justin.tv's Justin Kan, who videotapes every moment of his day to stream live on the Web for public consumption, share their intimate conversations and moments. Likewise, millions have uploaded videos of themselves to Web sites such as YouTube and Metacafe.

Limits to Sharing

Despite all the sharing—or perhaps oversharing—privacy advocates maintain that many people do care. In her upcoming book, Privacy in Context, New York University professor Helen Nissenbaum argues that people expect varying amounts of privacy depending on where they are, even when online or in public. Nissenbaum points to the anger Facebook users showed when the social network installed a feature automatically updating all their approved "friends" to new posts. Clearly, she says, users expected that certain people would see the things they wrote, but that it would fly under the radar for most users (see BusinessWeek.com, 9/8/06, "Facebook Learns from Its Fumble").

Similarly, many AOL (TWX) users were outraged after the company posted search records, identifiable only by a number assigned to individual computers, on the Internet. Online publications identified several users from the data and The New York Times came knocking on one user's door, showing her searches about her family and friends' health problems. Several people sued AOL (see BusinessWeek.com, 8/23/06, "Fallout from AOL's Flub").

Whether it's a topless sunbather tanning on her roof in the Netherlands or just a guy on his cigarette break, most people don't expect millions of Internet voyeurs to catch them in the act. Perhaps they'll need to get used to it.

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Holahan is a writer for BusinessWeek.com in New York.