There may soon be a chilling breeze blowing through the halls of Facebook, MySpace, and Twitter. The reason for this coming chill is a just released application intended for monitoring employee communications on social networks. The new application, called Social Sentry, is being fielded by information technology powerhouse, Teneros, which has raised $92.5 million in venture capital over five rounds of funding.

Social Sentry differs from it's counterparts in that when employees leave their employer's computer network, this new communications monitoring software can follow those employees home, or to the library, or to an Internet cafe, or just about anywhere. Under the auspices of protecting proprietary business information, Social Sentry steps across the Fourth Amendment and goes where even law enforcement treads lightly.

Reasons abound for security protocol surrounding cell phone records at the major carriers. Consumers just don't like hearing about privacy breaches. But as the presidential office moves into the wired age, for the first time a President-elect is a red flag going off in Verizon Communications (NYSE: VZ)'s face.

A personal cell phone account owned by Barack Obama (but that has been inactive for several months) was confirmed to have been accessed by "several" of Verizon's employees -- all of whom have been placed on administrative paid leave pending an internal investigation into which did so for a good reason.

While it's easy to imagine the thrill that might accompany viewing the phone calls of the President-elect (how many minutes to that number in Chappaqua, New York in June?), it's also easy to imagine the potential damage that could arise from such illegal access, both to Obama (or any candidate) and to the trust the public places in its cell phone carriers. Verizon is right to have taken action and made the news public; but the company should have put more preventative measures in place to ensure its sensitive customers' data was secure.

Google (NASDAQ: GOOG) will enter the medical records business with The Cleveland Clinic, one of the top hospitals in the world.

According to The Wall Street Journal (subscription required), "Under the pilot, patients who already use Cleveland Clinic's personal health record system can securely share medical information such as prescriptions, conditions and allergies between the Cleveland Clinic system and a Google health-profile online."

The program is a good idea. Patients' records currently are tied to the data held by doctors and hospitals. If a patient wants to access his data or share it with other health-care providers, he has to request and wait, sometimes for days, to get information that could be very useful in his treatment.

The Google program may ruffle feathers of both doctors and health-care software management companies. Doctors are concerned with keeping records private. Once they are stored and accessible on the web this will be harder to control. Software companies that supply programs for managing medical records may find that the Google system competes with some of their business based on organizing and storing patient information.

But, for the patient who now has new-found access to his own data, the program gives him power over his own medical data.

Douglas A. McIntyre is an editor at 247wallst.com.

IAC InterActive (NASDAQ:IACI)'s Ask.com has about 5% of the U.S. search engine market -- not much.

But the internet property is going to try to go against the trend. Instead of taking data from customers to target ads, Ask.com will let users "hide" their search data to promote privacy. The company is launching "AskEraser," which will destroy all personal information about a user.

According to The New York Times, unlike typical online privacy controls that can be difficult for average users to find or modify, people will be able to turn AskEraser on or off with a single click."

The privacy police will probably be very happy about the announcement. But it takes a big targeting tool away from Ask, and Ask can use all the help that it can get. It has tried and tried but has had no success in prying search share from Google (NASDAQ: GOOG) or Yahoo! (NASDAQ: YHOO).

The move by Ask is based on the premise that most people care if search engines collect data on them to better target search results and advertising. Since very few people opt out of programs that collect data online, the answer is that almost no one gives a damn.

Douglas A. McIntyre is an editor at 247wallst.com.

MoveOn.org may get its way. After launching a pretty aggressive campaign against Facebook's new Beacon service, BusinessWeek is reporting that Facebook management may finally be caving in to pressure to change the service. BloggingStocks' Aaron Katsman wrote earlier this week rather critically about MoveOn.org's stance.

The Beacon service allows website owners to "Enable your customers to share the actions they take on your website with their Facebook friends." By just adding a few lines of code to an e-commerce website, for example, purchase information from customers who are also Facebook users could be posted onto Facebook in a move deemed by MoveOn.org to be too much of a privacy invasion.

MoveOn.org's campaign (see it here) focuses on the privacy ramifications of Beacon. "When you buy a book or movie online -- or make a political contribution -- do you want that information automatically shared with the world on Facebook?" says the MoveOn.org website.

Facebook has had a breakout year -- BloggingStocks probably should have listed the social networking site among our Hot Products of 2007. It sold a small stake to Microsoft for $240 million, and its success with encouraging third-party add-ons forced News Corp (NYSE: NWS)'s MySpace and even the mighty Google (NASDAQ: GOOG) to change tactics. But as Tom Taulli and The Wall Street Journal addressed yesterday, Facebook's stock with privacy advocates is dropping over its über-creepy Beacon targeted advertising method.

On Facebook, you're as private as you are modest. You have the option of laying bare your bookshelf, Netflix (NASDAQ: NFLX) queue and purse contents for all your friends and neighbors to pan through, or you can leave all that business blank and keep your fancies as mysterious and enigmatic as you are, you unique snowflake. My profile tells users -- not to mention advertisers -- that I like to put on CNBC and dust my marriage-prohibitive record collection. Consequently, I've got E*Trade (NASDAQ: ETFC) and the occasional ironic t-shirt vendor after me, greeting me with animated ads whenever I log in.

By now, web users have learned to deal with e-tailers and ad-serving scripts tracking their behavior, realizing that oft-maligned cookies effectively just save you the effort of typing your password. This is reasonable targeted marketing: I pay nothing for a service, and in exchange, some vendor imagines it got a little closer to a selling me something.

Where Facebook and all the participating advertisers that sail with her cross the icky line is with Beacon. Beacon goes beyond serving up targeted ads -- it takes my purchase information from participating advertisers and broadcasts it endorsement-style to all my Facebook friends, as well as any others in my network who, for whatever illness or boredom, feel like probing my Facebook essence.

After my post of last week lambasting NebuAd for using information obtained from internet service providers in order to serve ads to web browsers based on users' browsing behavior, I was contacted by the CEO of NebuAd, Robert Dykes. He agreed to talk with me about his company and the internet advertising world.

I started by asking Dykes what steps NebuAD has taken to maintain the privacy of the customers of the ISPs with which they work. Dykes told me his company realized early on the security implications of its processes.

"In formulating the structure of how our equipment would work, (at this time) the government was subpoenaing AT&T and Verizon for their data... (and) AOL's search data had become public. We realized that...we had to be extremely careful in the way we structured our equipment and what we did on the internet... so that we would never be the subject of a subpoena from the government. So our structure is such that we never have any information that would be of use to the government. (There) never would be any information there of a personal nature.

"(We) built our system such that, as we map a user over and over again... that mapping is reflected only as a hash number, not as any personally identifiable information, not even an IP address... All we track is that somebody qualified for certain interest categories...(we) don't keep the raw data about what searches they did."

11-18 note: see my later post for more and updated information on this story.

A new ad delivery system unveiled this week by NebuAd will provide advertisers unprecedented details about your web access activities, allowing them to place their advertising more effectively.

Unlike conventional ad delivery companies that track your choices when you log onto a site that is part of its network, NebuAd takes the concept one frightening step further, tracking your browsing via your internet service provider (ISP).

The difference? Think of the typical ad delivery system as a lookout that spots you when you pull into the parking lot of the mall, who then alerts all the merchants that you've arrived, so they can put up the appropriate displays for your tastes.

In this analogy, NebuAd would be a guy staking out your house, ready to tail you, or your children, wherever you go, reporting your comings and goings to anyone willing to pay for the information.

The company claims that it aggregates and anonymizes the information such that it can't be misused, a claim that I view with great skepticism. As the FTC probes privacy issues and internet advertising, this company will probably serve as the stalking horse. If it's allowed to thrive, there will be little left to defend.

TiVo (NASDAQ: TIVO) is a small company that has to compete with the digital recording devices offered by cable companies. To try to increase its revenue, the company will use its set-top boxes and data gathered from other sources to offer "demographic data about the viewers themselves, such as age, income, marital status and ethnicity," The Wall Street Journal reports.

It's a nifty idea, but all of those privacy advocates may not like it.

The new data should help marketers identify the demographics of viewers who skip ads. The TiVo data is based on 20,000 hours of sample data, while Nielsen uses only 3,000 hours for its similar service. TiVo will also allow marketers to talk to its customers using online polls. "The ability to talk to the panel and find out why they are skipping the commercial is key," Chris Boothe, head of Publicis Starcom group, told the Journal.

TiVo raffled off one of its boxes to get its customers to give up their demographic data.

Whether TiVo's customers will be concerned about marketers prying into their habits remains to be seen. Perhaps a few more free TiVo boxes will keep them from any revolt.

Update: Privacy and technology is a hot issue right now. Are things getting too interactive?

• New internet ad delivery system gives companies unprecedented details about your surfing;
• Voice-over-internet phone company listens into your calls, shows you ads; but
  
• In an about-face, Google announces new protections for 'net privacy.

Douglas A. McIntyre is an editor at 247wallst.com

Imagine having a hot late-night phone conversation with your lover -- and then seeing an ad on your computer for condoms, or perhaps even Cool-Whip, if you're the kinky type.

That seems to be the idea of Pudding Media, a start-up company providing a Skype-like internet phone service with a twist: There are no toll charges, but Pudding will listen in on your calls and display ads on your computer related to the stuff you talk about. However, Pudding's voice recognition software screens out dirty words.

According to The New York Times, "The company's model, of course, raises questions about the line between target advertising and violation of privacy. Consumer-brand companies are increasingly trying to use data about people to deliver different ads to them based on their demographics and behavior online."

But it's the consumers choice. If you're concerned about your privacy, don't use Pudding! I'm sure lots of Americans will be happy to trade a little bit of privacy for free phone calls and, if Pudding can find a way to adequately monetize the service, this idea could take off.

Google (NASDAQ:GOOG) has been a target for a number of internet privacy groups who feel that it keeps personal data on users for too long. Google argues that having the data helps deliver better search results. Plus, the company decided to cave into pressure and agreed to keep data on individuals no longer than 18 months.

Now, Google want to be out in front of the drive for Internet privacy. It is an unlikely about face, but it is one nonetheless. According to the Financial Times, Google is "calling for new international laws to be set up to protect personal information online." It wants a body like the UN to draw up the rules.

Google's position is clearly one that it would rather not be forced to take, but it is making the best out of a bad situation. Clearly, the more data a search engine has, the better the results. This allows for better text ad targeting and better profits. Now that Google has purchased DoubleClick the use of data collected from users is even more important to get good results for display ads.

But, Google has to protect its image and so instead of just going along, it will lead the parade.

The company may figure that if it take a central position in drafting new rules so that it can at least slant them a bit to its advantage. It is not being helpful for nothing.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Paris Hilton has reportedly sued Hallmark for a greeting card that uses a photo of her and her trademarked catch-phrase "That's hot."

Hilton is seeking at least $500,000 in damages and a permanent injunction barring Hallmark from further use of her name, likeness, and catchphrase. She accuses the company of invading her privacy and misappropriating her image.

Yes, it isn't the sex tape that has hurt her privacy. Oh, and what about the innocent people who could have been harmed when Paris drove drunk? What about their rights to privacy/life? No, it's all a Hallmark greeting card.

Paris Hilton is being an idiot with this lawsuit. She's a public figure -- in fact, that's all she is. She's famous for being famous, and has been among the most shameless self-promoters this side of Don King. Given that, she should expect to be satirized, and that's exactly what Hallmark has done.

When Hilton went on Larry King after her release from the slammer, Paris talked about her "new outlook on life," and later mentioned her desire to do some good in the world and devote time to philanthropy.

She appears to be back to her old stunts: feeling sorry for herself as a result of her own self-inflicted celebrity. Hey Paris, get on with the charity work you waxed about, and stop being lame.

Time Warner Inc. (NYSE: TWX) has received the required clearance to acquire Tacoda Inc., a company that targets ads based on a web user's browsing habits. There is no issue with this deal clearing. Time Warner could acquire 100 companies like this and the Federal Trade Commission and Department of Justice would rubber stamp every single deal.

It is almost funny that the two recent big media and online buys -- Microsoft Corp. (NASDAQ: MSFT) has bought aQuantive and Google Inc. (NASDAQ: GOOG) has acquired DoubleClick -- are still being reviewed by some. Those purchases cannot be reversed.

Back to Time Warner and AOL: AOL has found itself in a predicament over backing away from prior estimates for "faster than market growth" for its search-related advertising sales. But if you look back at last month's comScore numbers, as we pointed out earlier, you will realize that AOL has a massive reach through its Advertising.com division. Any such deal that can incrementally ad both new advertising groups and that can reach more people will be an opportunity for incredible advertising leverage.

It's hard to cover a company like Time Warner one unit at a time. Many in the media still want to only cover negative aspects of the company, and considering it is a shot at bashing a competitor it is hard to blame them. Just last week, AOL launched Truveo. AOL may be its own entity next year if my thought process is accurate and the clouds drift the way they have historically. This will allow it to keep adding small strategic plays that can help grow both AOL and the other Time Warner brands. That will be a winning recipe for the company, and should be a winning recipe for shareholders.

Jon Ogg is a partner at 24/7 Wall St, LLC. He produces the 24/7 Wall St. Special Situation Investing Newsletter and does not own securities in the companies he covers.

Whether it matters or not Microsoft (NASDAQ: MSFT), Yahoo! (NASDAQ: YHOO), and IACI's (NASD:IACI) Ask.com are all beginning programs to keep users search data private. Yahoo! actually plans to make (subscription required) all user search data anonymous within 13 months of collecting it.

Personal information can be used to improve the search results that are sent back to users. But, Ask and Microsoft are trying to band together with a number of companies and advocacy groups to set a coherent policy for keeping data on individual habits and data private.

Cynics might view the new enthusiasm for privacy two ways. The first is that it is a move by companies with a small share of the search market to pressure Google (NASDAQ: GOOG) to improve its privacy standards. This could hurt the accuracy of the company's search service by taking away key data that allow results to be more accurate.

The other take on the move is that protecting privacy data is much like building "green" cars. Critics and government agencies are becoming more interested in keeping the "Big Brother" aspect of search at bay. People's habits should be private and not part of a large black box that tracks their habits to serve more targeted marketing messages or collect information on who is not paying taxes.

The best solution is probably for people who don't want their data collected to avoid searching altogether. Personal data makes search results better. People can't ignore that.

Douglas A. McIntyre is a partner at 24/7 Wall St.

It has been reported in China Tech News that Dr. Kai-Fu Lee, president of Google (NASDAQ: GOOG) China claims Google will be moving some servers to China in an effort to better serve that country. I have yet been unable to confirm Lee's claim. At this point it appears to be mostly optimistic speculation on Lee's part although the move would have significant advantages for Google in serving the Chinese sector of its market and the growth it needs there.

Google is not the largest search entity in China. Putting servers in that country would establish a tangible presence there and enhance the company's branding efforts in China. Lee also claims that Google would be offering free mapping services to China mobile users. At present, mobile communications are exploding in Asian markets.

Drawbacks to this reported move by Google would include exposure to significant risks which Google will need to aggressively address in order to make the move successful. Data security is less than optimal in China and being that a communist stronghold requires a different level of information disclosure than the free world is used to, Google would be playing in an arena which is governed by a whole different set of rules. Additionally, spurred by stiff competition in China's technology sectors, the Chinese government has had to initiate actions to deal with an influx of infrastructure vandals who are damaging transmission lines and equipment there.