Privacy or Anonymity

The Wall Street Journal has been running a series on the business of online "spying" for marketing information about web browsers. From today's installment:

You may not know a company called [x+1] Inc., but it may well know a lot about you.

From a single click on a web site, [x+1] correctly identified Carrie Isaac as a young Colorado Springs parent who lives on about $50,000 a year, shops at Wal-Mart and rents kids' videos. The company deduced that Paul Boulifard, a Nashville architect, is childless, likes to travel and buys used cars. And [x+1] determined that Thomas Burney, a Colorado building contractor, is a skier with a college degree and looks like he has good credit.

The company didn't get every detail correct. But its ability to make snap assessments of individuals is accurate enough that Capital One Financial Corp. uses [x+1]'s calculations to instantly decide which credit cards to show first-time visitors to its website.

In short: Websites are gaining the ability to decide whether or not you'd be a good customer, before you tell them a single thing about yourself.

The technology reaches beyond the personalization familiar on sites like Amazon.com, which uses its own in-house data on its customers to show them new items they might like.

By contrast, firms like [x+1] tap into vast databases of people's online behavior—mainly gathered surreptitiously by tracking technologies that have become ubiquitous on websites across the Internet. They don't have people's names, but cross-reference that data with records of home ownership, family income, marital status and favorite restaurants, among other things. Then, using statistical analysis, they start to make assumptions about the proclivities of individual Web surfers.

Examples of this technology in action are described as follows:

To gauge the system's accuracy, the Journal asked eight people to visit the credit-card page of Capital One's site and note the credit cards they were shown. The Journal also analyzed the computer code that zipped back and forth between the testers' computers and Capital One.

Separately, the Journal asked its testers to click on a custom website that [x+1] built to demonstrate its technology. After the testers clicked on that site, [x+1] described to the Journal what it knew about each person.

Throughout both of these processes, the testers didn't reveal any personal information.

[x+1]'s assessments of the testers were generally accurate, though some specific details missed the mark. For instance, [x+1] correctly placed Ms. Isaac, the Colorado Springs mom, in a Nielsen demographic segment called "White Picket Fences." People in this group live in small cities, have a median household income of $53,901, are 25 to 44 years old with kids, work in white-collar or service jobs, generally own their own home, and have some college education.

All of those points were correct for Ms. Isaac—to her surprise. "They pinpointed my income more accurately than I remembered it," she says.

But the "White Picket Fence" category wasn't 100% accurate. It suggested Ms. Isaac might read People en Espanol, watch Toon Disney and drive a Nissan Frontier truck. In fact, she doesn't speak Spanish, doesn't subscribe to cable TV and doesn't drive a truck.

I'm curious what others think of this.

This is the sort of "privacy" issue which I find it difficult to get worked up about. While I'm not exactly crazy about companies tapping into my browsing history, I can't get chills to go up my spine about the idea of some marketing company classifying me as a married man, aged 30-45 who reads the Wall Street Journal, has kids, shops on Amazon and reads a lot about religion and economics. Big whoop, as the saying used to go.

Certainly the technology could be mis-used in the wrong hands -- mostly as a way of identifying people as having "enemy" tendencies. Imagine if when you filed your taxes electronically the IRS quickly downloaded your browsing history and assigned people who read National Review and Fox News frequently to the audit list. I'm sure everyone, in every part of the ideological spectrum, could come up with some sort of nightmare scenario using this kind of technology. However, I don't see any particular reason to be upset about the particular uses described in this series. (Nor do I honestly foresee such politburo tactics coming into use in the US in the near future.)

It seems to me that this kind of marketing profile tracking is not very much of a privacy invasion, since names aren't assigned to the data and it's really just a means of assigning people to a profile -- much as a real life salesperson might do visually in the moment of sizing you up as you enter a store.

Should this kind of thing be considered a privacy worry, or does it merely fall in the harmless to slightly annoying range? Is it important that we retain absolute privacy online (except where we choose to divulge information intentionally) or is anonymity enough?