Does it seems like news of companies overextending their welcome to user data and the resulting consumer backlash is reaching the boiling point?

In December, Google’s CEO, Eric Schmidt said “If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.” – Google chief: Only miscreants worry about net privacy

That’s a bold statement for the CEO of any major company, especially Google, which has a history of criticism for their privacy practices.  Google was also recently criticized for their handling of a privacy problem with the widely used Google Toolbar.

By now, everyone knows about the famous Facebook Beacon incident.  In December, Facebook made another attempt to make user information more public with their new privacy settings.  Facebook tried to spin the news as a win for users.  However, the changes were really designed to give Facebook evidence that users consented to sharing their information with the world even if users didn’t pay attention and selected Facebook’s “share with everyone” setting, the default if the user had not previously adjusted their privacy settings.

Many other major internet companies are employing similar strategies as they all struggle with the balance between keeping users happy and running profitable businesses. I respect that balance.  However, I have a problem with companies knowingly taking advantage of people who don’t read or understand their terms or bundle tracking software with other products in a misleading way.

I’m all for personal responsibility, but the fact is, most internet users don’t understand online privacy. The average person doesn’t know very much about what information is tracked, how companies use it, or how to control information collection on their computer through browser settings, add-ons, and software.

What’s next? Are we approaching the limit of tolerance for these practices?  Will there be legal action?  Will consumers stop using some of these major services?  What do you think?