First the progress. According to a report published this week by the Center for Democracy and Technology (CDT), a civil liberties advocacy group, the largest Internet search companies are beginning to compete aggressively with one another to offer stronger privacy protections.

"We hope this signals the emergence of a new competitive marketplace for privacy," CDT President Leslie Harris said in a statement. "By themselves, these recent changes represent only a small step toward providing users the full range of privacy protections they need and deserve, but if this competitive push continues, it can only stand to benefit consumers."

Positive Privacy Steps

Until recently, most of the major Internet search engines kept detailed -- and potentially personally identifiable -- records of their customers' searches for as long as they deemed them useful, which generally meant indefinitely. In a string of recent statements, the companies announced steps they were taking to delete old user data , strip the personally identifiable information out of stored search records, and, in one case, give users the option to have all of their search records deleted.

The CDT report acknowledged that there are legitimate reasons for companies to retain some search records for a limited time, but recommended that companies continue to seek new ways to give users greater control over their personally identifiable data. The report also noted that industry self-regulation -- while vital -- is only one part of a broader privacy solution.

"It's encouraging to see the nation's largest Internet companies taking search privacy seriously," CDT Deputy Director Ari Schwartz said in a statement. "Now it's time for Congress to do its part by passing a robust federal law that brings our consumer privacy protections up to the level that users expect."

Critics Speak Out

Now the other side of the story. Privacy advocates are criticizing the study because CDT takes donations from vendors that stand to win or lose in the privacy game. "The CDT is partially funded by search companies, which is hysterical. Basically you have a trade group saying that the trade industry practices look great and there's no need for the government to regulate. Most people in Washington are going to see through that," said Marc Rotenberg, executive director of the Electronic Privacy Information Center.

CDT takes some credit for putting pressure on the industry to develop more searcher-friendly privacy standards. But privacy advocates say it's not enough in the face of enormous consolidation in the online advertising industry that will lead to deeper profiles of Internet users and facilitate a controversial method called behavioral targeting. Behavioral targeting places ads on search results pages based on both current and past search histories.

"Search companies are facing a privacy fire storm," Rotenberg said. "Google has genuine concern right now that the FTC is going to block the proposed merger of Google and DoubleClick, and they are trying desperately to reassure people that they are taking some steps toward privacy and don't need government regulation."

Recommended Reading: Search & Destroy: Why You Can't Trust Google Inc. Synopsis: This is the other side of the Google story. In Search & Destroy, Google expert Scott Cleland, shows that the world's most powerful company is not who it pretends to be. Google pretends to be a harmless lamb, but chose a full-size model of a Tyrannosaurus Rex as its mascot. Beware the T-Rex in sheep's clothing.