Last week, the New York Times reported on the growing tendency of Web companies to catalog customers’ every move. This phenomenon, in which advertisers gather as much info as they can about customers, is nothing new, and historically goes hand-in-hand with the very basics of advertising itself.

But what is new is the expanded capabilities to track behavior patterns available only on the Internet. And, as the lion’s share of American commerce continues to shift online and away from traditional brick-and-mortar settings, there’s a strong demand for such information. Companies compiling such statistics are finding themselves in possession of an asset that’s more and more valuable in today’s increasingly competitive consumer economy.

Privacy advocates are speaking out against these actions, using the argument that consumers aren’t being made aware that their behavior is being tracked. But then again, companies aren’t legally required to share such information.

From Louise Story’s March 10 article:

The Web companies are, in effect, taking the trail of crumbs people leave behind as they move around the Internet, and then analyzing them to anticipate people’s next steps. So anybody who searches for information on such disparate topics as iron supplements, airlines, hotels and soft drinks may see ads for those products and services later on.

Consumers have not complained to any great extent about data collection online. But privacy experts say that is because the collection is invisible to them. Unlike Facebook’s Beacon program, which stirred controversy last year when it broadcast its members’ purchases to their online friends, most companies do not flash a notice on the screen when they collect data about visitors to their sites.

“When you start to get into the details, it’s scarier than you might suspect,” said Marc Rotenberg, executive director of the Electronic Privacy Information Center, a privacy rights group. “We’re recording preferences, hopes, worries and fears.”

But executives from the largest Web companies say that privacy fears are misplaced, and that they have policies in place to protect consumers’ names and other personal information from advertisers. Moreover, they say, the data is a boon to consumers, because it makes the ads they see more relevant.

Perhaps most noteworthy is the fact that this is no fringe movement. Big players such as Microsfot and Yahoo are taking a very strong interest in the findings of these consumer-tracking groups.

Web companies once could monitor the actions of consumers only on their own sites. But over the last couple of years, the Internet giants have spread their reach by acting as intermediaries that place ads on thousands of Web sites, and now can follow people’s activities on far more sites.

Large Web companies like Microsoft and Yahoo have also acquired a number of companies in the last year that have rich consumer data. …

Web companies also can collect more data as people spend more time online. The number of searches that American Web users enter each month has nearly doubled since summer of 2006, to 14.6 billion searches in January, according to comScore. …

Even with all the data Web companies have, they are finding ways to obtain more. The giant Internet portals have been buying ad-delivery companies like DoubleClick and Atlas, which have stockpiles of information. Atlas, for example, delivers 6 billion ads every day. The comScore figures do not capture such data.

Executives from Web companies said they had been working to inform consumers on their data practices.

These companies noted their consumer-protection policies. AOL, for example, lets users opt out of some ad targeting, Google lets users edit the search histories that are linked to their user names, Yahoo is working on a policy to obscure people’s computer identification addresses that are connected to search results, and Microsoft says it does not link any of its visitors’ behavior to their user names, even if those people are registered.

A study of California adults last year found that 85 percent thought sites should not be allowed to track their behavior around the Web to show them ads, according to the Samuelson Law, Technology & Public Policy Clinic at the University of California at Berkeley, which conducted the study.

So what do you think? Is this part of the natural course of the market, in which companies have to use every card available to them to court consumers? Or does it represent a new and possibly dangerous breach into the privacy of Internet users? Whatever your feelings, the general consensus is that this is a gray area that will likely continue to generate controversy as these policies escalate (which they are certain to do).