The intersection of Privacy, Commerce, and Advertising

I've been thinking a bit recently about privacy on the Internet. It seems that the new application model these days are applications that run in your browser, and are hosted on some 3rd party server. This model is all the rage these days, and for good reason. There is no software to install or upgrade, you can get at your data from anywhere, and when done properly, it makes collaboration a breeze.

However, nothing is perfect, and there is a problem with this model -- a loss of privacy. In the "bad old days", you could run Microsoft Word as many times as you want, write as many documents as you wanted with it, and nobody could know about what you were doing. Microsoft didn't get notified every time you booted Windows or started Word, so your privacy was ensured. In addition, there were a number of different channels through which you could have procured these pieces of software, which made it hard for the Government to track what you were buying.

With applications hosted on the Internet, however, none of the above is true. Every time you access an online application, the provider knows because you have to login with your pre-established identity. This is so that you can gain access to your, which is segregated from all of the other users of the site. So now, every time you author a document in Writely (for example), there is a log that shows when you logged in, and what you did.

In addition, in order to for you to be able to access your data from any computer, it must be stored on the server too. And currently, there isn't a good way (that I know of) to prevent the application provider from being able to read your data. Most application providers say in their terms of service that the data is "yours". But my data hosted on a corporate server and my data hosted on my own hard drive are two very different things.

In general, there doesn't seem to be any backlash from the user community against this lack of privacy. In fact, people seem to be willing to trade in their privacy in order to reap the benefits that I described above. And sometimes, I am one of those people. But this data appears to be quite valuable, both to the government (illegal wire taps anyone?) and also to advertisers.

And while currently, advertisers are pissed off at all of these Tivo users who are skipping their commercials, they are about to discover the power that advertising on the Internet brings them, in the form of highly-targed ads, with great feedback on ad response. As a result, when advertisers do really start going after the Internet, there is going to be tremendous pressure placed on all of these application providers to sell or otherwise use your private data to the benefit of advertisers.

And this is what I am struggling with currently.

I'm not so sure that I want all of these companies (and the government) knowing all of this detailed data about me. But what's worse, is that my moral compass is having a hard time figuring out what is right and wrong here. I am sure that there are lot of people, who are a whole lot smarter than me, already pondering these sorts of issues. So, the next step for me is to start doing some research, so that I can try to educate my moral compass in order to start making some more informed decisions.

Comments welcome.

-Andy.