Who's Watching You on the Web?

Think back. Where did you go when you logged on to the Internet last night? What Web sites did you visit last month? Last year? If you're like me, you couldn't begin to compile an accurate list of recent online wanderings--let alone a summary of sites you visited months ago. But unless you've taken extraordinary measures to protect your privacy, chances are at least one company (and probably more) has a pretty good accounting of your surfing habits.

Most experienced Web goers (and even many newcomers) know about cookies--little files that Web sites store on your computer's hard drive to identify you as a distinct visitor. A Web site may use cookies to keep track of items in an online shopping cart, to simplify the log-in process, or to provide customized news, weather, and sports information based on your stated interests. In theory, a cookie only transmits information back to the Web site that put it there and can't be accessed by other parties.

But a few influential Internet advertising companies have overcome this limitation by dispatching their own cookies whenever you visit a site that displays their banner ads. These companies use cookies to create fairly sophisticated profiles of visitors' online habits--often without the visitors' knowledge and usually without their consent. And they can use these profiles to target people with commercial solicitations in the form of banner ads and (in some cases) e-mail messages that clutter their in-boxes.

Here's an outline of how online profiling works: Let's say I'm looking for a first-edition copy from the wildly popular Harry Potter book series. I go to AltaVista and search for sites that sell rare books. By storing a snapshot of my search, the company that has placed the ever-present banner ad at the top of AltaVista's page--in this case, DoubleClick--has taken the first step in building a profile of my surfing habits. From this point on (until I change browsers, buy a new computer, or delete my cookies file), DoubleClick can track my browser's activity across all sites on which it handles banner ad placement.

And since DoubleClick controls some 60 percent of the banner ad market, the company has a long reach and extensive information on consumers. Every time I enter a new search term on AltaVista, check my investment portfolio at Quicken.com, compare fares at Travelocity.com, or visit any of the DoubleClick Network's hundreds of client sites (including PC World Online), this profiling powerhouse collects more data about where I go and what I do online.