Advocates of the process downplay the danger and insist that divulging personal data is part of the price of admission to the Internet.
This customer "profiling" became possible when Internet advertising firm DoubleClick purchased Abacus Direct and gained access to its database of an estimated 2 billion transactions.
"This is a very gnarly territory," says Tom Maddox, editor of PrivacyPlace.com, an online privacy news source. "This is the smoking gun, proof that privacy advocates warnings are not alarmist."
The Electronic Privacy Information Center (EPIC) plans to file a complaint with the Federal Trade Commission (FTC) by February 16 charging that DoubleClick has duped consumers by suggesting the company's technology lets them remain anonymous, according to a report by USA Today earlier this week.
Consumers can log on to the DoubleClick site and "opt out" of the system, but critics say this is as ineffective as answering spam with a "please remove me" response.
Predictably, those in the advertising business downplay the threat.
"It's a double-edged sword," says Alejandro Levins, founder of SF Interactive, an Internet advertising agency. "The progress that is most exciting is what brings about the perceived lack of privacy."
A targeted ad is more valuable than a random effort, and is also more valuable to a consumer, Levins maintains. He is concerned about privacy and does not feel information is being used improperly, but if such misuse emerges he will be the first to protest, Levins adds. But critics warn that by the time a threat becomes real, it is too large to stop.
Balancing value, nuisance
John Perry Barlow, founder of the Electronic Frontier Foundation (EFF), calls the targeted advertising process terrible for privacy but great for economic efficiency.
"We can have a much more efficient and resource-intensive economy if we don't bombard the market with products people don't need," he says. "But even if we give people what they are looking for, it is not necessary to include the name and address in order to understand market behavior."
Maddox concurs. "It's possible to do this in an aggregate, where you target me but you don't necessarily know who I am."
Danger with mergers and acquisitions
The tendency toward mergers and acquisitions can endanger personal privacy as well, Maddox adds. A person who has divulged data to a certain site, which is then acquired, may lose control of this personal information. As a solution, he suggests an "infomediary;" a place where you divulge personal data -- like depositing it in a bank - and then instruct who gets access and who does not.
Barlow says the controversy is a matter of ethics and not of laws, and that the owners of the information need to be responsible about how they use it. And while he is a privacy advocate, he does not necessarily favor legislation that would shut down targeting.
"The best protection of privacy is to not have the data there in the first place," he says. "But there is a necessary tension between the right of privacy and the right of free speech. I get uncomfortable when the government tells me what kind of information that I can or cannot have."