PaidContent covers a complaint filed by consumer advocacy groups with the Federal Trade Commission regarding online advertising and consumer privacy. (You can download and read the entire complaint if you like.)
The thrust of the complaint involves using consumer registration data as the basis for ad targeting, something that both Microsoft and Yahoo! currently do, among others including online newspapers. Google is also named in the complaint.
Paid search is generally safe but behavioral and other types of precision ad targeting (e.g., demographic) — one of the chief selling points of online vs. traditional media — may ultimately have to be changed if this issue has “legs.”
Since most government agencies are now basically corrupt (there’s a cynical, political comment) and are only motivated by external rewards and punishments (rather than legal duty), the question of whether any action is taken will depend almost entirely on political pressure and media exposure.
One compromise might be to beef up disclosure requirements to consumers about how their data may be used upon registration and have strict controls to ensure that no personally identifiable information is made available to marketers (this is what the portals would say is now the case).
PaidContent also links to a more digestible WashingtonPost story about the complaint and the issue.