How do companies get information about our online activities, and what are they doing with it?
The primary way in which a company gathers data about your online activity is by using a bit of software called a "cookie" which is automatically inserted on your computer by your browser when you visit a site. Don't freak out yet. Cookies are arguably the most important component of internet browsing after the browser itself. There are thousands of different cookies out there and they are used for a variety of reasons ranging from storing your password on Gmail, and keeping track of what's in your shopping cart on overstock.com to tracking your purchases for advertising and marketing purposes, as well as occasionally acting as spyware and stealing your banking info. So before we condemn cookies as the evil tools of giant corporations it is important to state that without cookies the internet would pretty much suck, as cookie technology is basically what makes function. However, for all the benefits of using cookie technology, there is downside. There are literally hundreds, maybe thousands, of companies using this technology to compile massive amounts of information about us and our online behavior, and then selling that information for a profit.
Why do they want this info? In most cases it's just companies who want to sell you stuff, or simply to keep track of what parts of their website are the most popular. And as long as there is a market for this type of info, information companies will want to collect it so that they can sell it to the marketers who will use it.
On any given website, with the exception of a few highly secure and privacy oriented ones (www.cia.gov for example), there are tacking cookies examining and storing the details of your online behavior, and there is no rule (in the u.s.) saying that the information collected has to be protected other than a companies desire to protect profits (also much of this information is personally identifiable). For example: I just visited walmart.com and was tracked by four different companies employed by walmart to provide them with intelligence about customers online shopping behavior, preferences, and ease of use (info from Ghostery.com).
These practices don't necessarily constitute invasive behavior on the part of companies who use these tools, but they do provide a reason for concern. The massive amounts of data gathered by these companies may never really go away, and that fact will always carry with it concerns about potential surreptitious uses.
I agree with the notion that for the most part cookies are pretty harmless and do in fact enhance our experiences online. Although there are certain situations where it can be dangerous. As you had mentioned usually companies store the information to sell you stuff that you'd be interested in. Worst case scenario though (at least in my opinion) would be what if someone leaked out personal information or the company gets hacked. It would be very hard to trace where the information could have gone and can cause a lot of problems for people such as their finances and emotions (that feeling of being robbed or violated). While cookies do make things convenient, so long as they are used moderately I don't really feel like it should be too much of a problem.
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