The European Union expects to bring its regulatory power to bear on online behavioral targeting practices next year, as protests over privacy concerns has begun to stir a potential backlash against recent marketing enhancements by social networks like Facebook. Reuters reported that the EU’s data protection commission, known as the Article 29 Working Party, is preparing to devote a great deal of time to the kinds of information websites maintain about their users. Late last month, the U.S. FTC also began discussions with the online ad industry about its problems with behavioral targeting.

The EU’s move comes as a storm of protest has erupted against new behavioral marketing initiatives from Facebook. The social net has found itself targeted by MoveOn.org, a left-wing activist group that’s generally been focused on opposition to the war in Iraq, over Beacon, a feature of its SocialAds program. MoveOn charges that Beacon violates users’ privacy because Facebook members’ purchases made on the social net’s marketing partner sites are included in other members’ news feeds, News.com reported. Facebook defends the Beacon by saying that the information is only open to members’ Facebook friends and members can opt-out of the program. So far, Reuters (NSDQ: RTRSY) noted that over 13,000 users have signed MoveOn’s petition against Beacon.

While advertisers and agencies initially greeted the expanded behavioral targeting methods being offered with great enthusiasm, some are now expressing fear of a backlash. Just before the Thanksgiving holiday, I spoke with Tim Hanlon, EVP-ventures, for Publicis Groupe’s interactive marketing consultancy Denuo, about how advertisers are likely to view the recent uproar over Facebook’s Beacon, as well as his own personal experience with the Facebook feature as a consumer.

“Facebook risks engendering a real and sustained backlash from its users if it doesn’t re-think its approach to the Beacon product’s privacy,” Hanlon said, both as industry insider and Facebook member.

Earlier in the week, Hanlon rented a car through Hotwire, an IAC-owned site and a Facebook partner. A pop-up immediately told him that his purchase would be published on his Facebook news feed - “the ‘Beacon’ application in action.” Although given the choice to opt-out when he went to Facebook’s privacy control area, he was not allowed to adjust the settings to opt out of all future purchase-publish scenarios. He would have to go back each time he made a purchase.

—The Real Test: He said: “The gold-standard in direct marketing circles for respecting consumers’ privacy has always been opt-in. But Facebook has not only chosen the far more cumbersome and burdensome path of opt-out, but also forced users to choose to opt-out every single time a related event occurs - with no option of opting out of the entire program altogether. You can be sure users who find this path questionable and/or onerous will voice their displeasure with this lack of flexibility, and I think the online holiday shopping season will be the real test of people’s tolerance for the current system.”

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