GigaOM

A European legal body has declared that ISPs who employ ad-serving technology from Phorm must do so on an opt-in basis, or risk violating UK and EU data protection laws. The move follows several months of controversy over the startup’s plans to broadly track the surfing habits of users and serve ads against them. While the system doesn’t seem terribly insidious, it is something that could quickly infringe privacy without setting off alarms.

It’s an issue another stateside company seeking to target ads to web users based on their surfing habits — NebuAd — is dealing with as well. And the proliferation of such companies is getting the attention of the FTC, which on Friday closed the public comment period related to regulating behavioral advertising. Unsurprisingly, industry members wanted less regulatory oversight; privacy groups, on the other hand, asked for less data retention, more transparency about data collection practices, and for such advertising to be done on an opt-in basis so that consumers are made aware that their web usage is being mined for advertising.

However, in this era of governments spying on citizens combined with the need to monetize all these nifty free online services through advertising, it’s unlikely that the FTC will get too heavy with the regulations. The demands of national security and Internet commerce are conspiring against privacy, and the consumer seems to be getting short shrift.