EU May Try To Nail New Google (GOOG) Model

Targeting advertising based on the behavior of web surfers is "Holy Grail" for internet marketing. TV, radio, and print cannot effectively look at past actions and then place ads based on future behavior. But, websites can collect data about personal habits and use it to tailor where marketing messages show up online.

But, Reuters writes that "targeted online advertising is set to face increased scrutiny from European Union regulators concerned about invasion of privacy, threatening the growth of a potentially big online revenue-booster for media companies."

Google (GOOG) has built much of its future strategy for improving its revenue on buying DoubleClick, which has the ability to collect behavior data on tens of millions of web users. Yahoo! (YHOO), Microsoft (MSFT), and AOL have moved down the same path.

If the EU acts against the use of collecting data and using it to place advertising, it could cost large internet companies hundreds of million of dollars in future revenue, and could cost investors billion of dollars of share value in the stocks of the largest internet companies. And, it raises the issue of whether any branch of the US government or Congress might take similar steps.

In other words, the path toward more revenue from online advertising could become blocked.

Douglas A. McIntyre