Google, Yahoo, Facebook Face Congress

(MoneyWatch)  Governmental interest in online behavioral advertising has been heating up since last summer when the House Energy and Commerce Committee issued letters to online ad industry leaders about whether they track consumer web surfing to better target advertising. The process continues as Google, Yahoo, and Facebook appear before two House subcommittees.

Yahoo and Google both plan to explain how their privacy policies work with respect to the data collected through behavioral advertising. Yahoo's Anne Toth said Wednesday she will emphasize that the company has introduced a plan (that it said won't be fully complete until 2010) to remove identifying links to personal data after 90 days and has taken steps such as linking one's decision to opt out of this type of ad serving to their Yahoo account, rather than a cookie.

Google will discuss similar measures, also pointing to the benefits of serving relevant ads--rather than random ads--to Web surfers, according to a copy of the prepared testimony submitted by Google's Nicole Wong, deputy general counsel.

The question can get particularly sticky for Facebook, as users fill out extensive profiles, often providing significant details about their lives, tastes, and interests. The company insists that it protects users' privacy:"The FTC's behavioral advertising principles recognize the important distinctions made by Facebook in its ad targeting between the use of aggregate, non-personally identifiable information that is not shared or sold to third parties," [Facebook Chief Privacy Officer Chris Kelly's] remarks read, "versus other sites' and companies surreptitious harvesting, sharing and sale of personally identifiable information to third party companies."

However, as Kelly said, the company "may have sometimes been inartful in communicating with our users," and the questions about its Beacon marketing program haven't all vanished.

High tech companies are finding themselves at uncomfortable intersection of forces:

• public concern over privacy
• a quickly developing online market
• the potential for technology to provide a 1984-type surveillance
• pressure on elected officials from a public unhappy with corporate, financial, and political scandals
• the relatively immaturity of many high tech companies

It's the same essential set of reasons that high tech companies are a growing target of antitrust interest and actions, both in the U.S. and Europe.

The problem facing the companies depending on online advertising is that the price of ads has dropped because the inventory is so large. To try and boost revenue, the ad networks want to provide information that might command a premium price. But when done through monitoring the behavior of consumers unbeknownst to them, there is a "creepiness" factor that makes the companies involved easy targets for legislators who want to look good about something come next election day.

Telescope image via stock.xchng user Poofy, site standard license.