Last Updated May 7, 2010 12:17 PM EDT
First it's important to understand that this kind of information exchange underpins the majority of commerce on the Web. When users visit a site, it's typically running a service, like Google (GOOG) Analytics, that's collecting their personal information for the site's owner. Facebook users who "Like" certain songs or movies are providing personal data to Facebook that it sells to third parties. And at the most basic level, every click you make is potential revenue for your Internet service provider, many of whom sell this information to marketing and analytical firms. Studies show that people live in a state of blissful ignorance about these transactions. The majority believe that companies aren't selling their information without their permission, and would be upset if they were. The result, as my colleague Erik Sherman pointed out, is an unproductive cycle in which business is largely governed by shame. Firms expands their information gathering quietly, burying the detail of its resale in the fine print of user agreements few people bother to read. This is inevitably followed by public outcry, like Facebook's Beacon project in 2008, or Charter cable's attempt at behavioral tracking, after which companies are forced to backtrack, wasting time and money.
Essentially, the bill means never having to say you're sorry again. Companies can move forward with more aggressive information collection and sale so long as they follow these rules. The worry for business, of course, is that the majority of people will opt-out of sharing their information. But a quick look at the way the Web is developing shows that won't be the case.