Companies like Yahoo!, Microsoft, and (especially) Google depend on being able to track your browsing habits to better target you with advertisements.  In the past 2 years, the proportion of ads being served through ad tracking networks has climbed from 5% to more than 30%, so these tracking networks like Doubleclick (Google), BlueLithium (Yahoo!) and aQuantive (Microsoft) are the lifeblood of the top web properties.  DoubleClick touches more than 80% of the addressable Internet population.

Tracking people's behavior on the web is incredibly lucrative, so everyone wants a piece of the action:

• FireFox, the popular web browser, has announced plans to track your browsing habits directly from the browser, without needing to use tracking cookies.
• AT&T has announced that they can track your browsing behavior directly off of the wire, without needing to extend the browser or use tracking cookies.  They will sell this information to ad networks, or use it to target their own ads.
• Several other ISPs have already embarked on projects to track people's behavior for ad tracking, supported by startups like NebuAd and Phorm.

With all of these companies fighting over you like a piece of meat, you'd think someone would ask you what you think.  Historically, the companies profiting from tracking your behavior have pointed out that people often say that they want privacy, but then give it up easily.  Google has gone so far as to say that there is "no such thing as complete privacy" and they don't get a lot of credit from the critics for sincerity.

So, must we resign ourselves to this trend?  Five years from now, will your web browser, ISP, and everyone else spy on you with impunity?

The answer seems to be "no".  The first volley was the class-action suit last week against Facebook for the abortive "Beacon" feature.  Facebook's "Beacon" feature wasn't actually intended to invade privacy, and didn't go nearly as far as the examples cited above -- but this case demonstrates that people actually *do* care about privacy, and are willing to take action to protect it.  Likewise, people almost immediately raised the privacy red flag when Yahoo! announced Fire Eagle location tracking service.

Far more interesting to me is the news yesterday that Congress will be taking up legislation to protect privacy online.  This legislation is aimed directly at web tracking networks and software or network operators who track your behavior.

This is huge.  The legislation would require companies to get your permission before spying on you.  A stronger proposal would require that those spying on your behavior allow you to opt-out at any time, and establish the equivalent of a "do not call" list.  There are many details to be worked out, and some well-funded parties with strong incentive to weaken the legislation, so I'm tempering my optimism.  But this is a huge step in the right direction.

What do you think?  Do we need legislation, or will the industry self-regulate?  And do you think that this proposed legislation stands a prayer of making it through the process with teeth intact?

Reader JenST responds to my recent analysis of "smartphone carnage", saying:

"See BT purchased Ribbit.  This could be the first move of the carriers to take control from Google, Microsoft, Apple."

JP Rangaswami, the guy at BT responsible for this acquisition, is one of my favorite bloggers, so I have followed this story with interest.  Although he doesn't talk about work on his blog, he is an extremely lucid and enjoyable thinker who understands this new world deeply.  And the news stories provide enough additional details to start forming opinions.

In short, I think JenST is right.  While it's too early to paint this as a direct assault on Google (or other carriers, for that matter), this is a really strategic acquisition.

The key thing to realize here is that BT is trying to do for carriers (and particularly, voice) what Facebook did for social networks, and what Amazon did for hosting.  This was BT's strategy prior to the Ribbit acquisition, and Ribbit was pursuing this strategy independently.  The essence of this strategy is to open up your platform, and let your developers evolve the difficult parts and edge cases organically.  Rather than trying to design a complex and monolithic platform speculatively before signing up a single developer, you define just the core pieces, and let the platform grow and adapt to real-world needs.

I respectfully disagree with Om, when he speculates that it will be *harder* for Ribbit to attract developers under the BT mantle.  When pursuing a Facebook/Amazon strategy, Ribbit had to convince developers that their network had critical mass -- a key value proposition of Facebook development is the millions of people already on the network.  With the BT partnership, Ribbit is instantly associated with a massive global network.  Now that the backing network is more than a toy (and a carrier with a real business model), Ribbit is a lot more interesting to serious developers.

Sam Dean expresses a slightly different concern, worrying that BT will squash the "openness" of Ribbit.  To be honest, I can't make heads or tails of this.  What exactly was so "open" about Ribbit in the first place?  It certainly wasn't "open source", and if all of the IP were entirely unencumbered, it's hard to imagine what the $105 million acquired.  Furthermore, the SDK currently supports only Flash, which is rather proprietary last I checked.  I am reminded of the recent controversy on FriendFeed over the promiscuous use of the word "open".  Let's just agree that Ribbit has some characteristics of "openness", just like the Facebook API and Amazon EC2/S3; and that this quasi-openness can add a lot of value to BT's walled garden just as Facebook's social graph and Amazon's physical infrastructure derive value from their controlled openness.

So ... will this move be the gasoline that lights a fire in the heretofore controlled world of telco platforms?  I don't know.  BT is clearly hoping to force the hand of other telcos and VOIP providers, just as Facebook and Amazon forced their larger competitors to follow suit.  So long as they nurture their developer community and show some measurable gains, other telcos will certainly need to pay attention.

But it seems that BT wish more to pre-empt a Google, Microsoft, or Apple move as much as disrupt their carrier competitors.  The money quote is JP saying:

"What we expect the competition to do – and we think it will much more likely be the Apples and Googles of the world – is to start positioning around a device [such as the iPhone] or an approach to connectivity [such as Google’s ad-based Web model"

Now, that is strategic thinking.  I am pleased (or am I?) that JP cannot imagine Microsoft being a player in this space.