Inside Google

New research finds

people fork over $5,000 worth of personal information a year to Google in exchange for access to its “free services” such as Gmail and search. While many view this as a fair trade, privacy experts say the Internet giant’s latest plan to pool user data from its various sites make it less so.

The new privacy policy – which Google contends will allow it to better target ads — goes into effect on March 1. In a press release, the company said it may combine the information users submit under their email accounts with information from other Google services or third parties. What people do and share on the social networking site Google+, Gmail and YouTube will be combined to create a more three-dimensional picture of consumers’ likes and dislikes, according to reports. Google did not return calls seeking comment.

Experts say that information is more valuable than people may think. Michael Fertik, CEO and founder of Reputation.com, one of a slew of new paid – and free — services to help consumers keep their web use anonymous, says personal information can be worth between $50 and $5,000 per person per year to advertisers and market researchers – depending on how much they spend and how useful the information is to third parties. Fertik says this explains why online breaches are so lucrative and on the rise. Others say the data may be worth billions of dollars to social networking sites and online marketing agencies. “Their entire market cap is related to how much data is being collected and used,” says Jules Polonetsky, director of the Future of Privacy Forum, a Washington, D.C.-based think-tank.

There are ways consumers can block online tracking, however. “Use private browsing, that’s Lesson 101,” Fertik says. For instance, FireFox web browser comes with a “Do Not

Track” option via “Options,” “Privacy” and “Tracking.” Reputation cleanup sites can also remove customers’ details from the world’s biggest direct marketing associations and data brokers.

The European Union announced new proposals Wednesday to keep online data private. In the U.S., there is a growing chorus of lawmakers who want to do the same . Currently, there are no state or federal limits on what information can be collected or with whom it can be shared, according to John M. Simpson, director of Consumer Watchdog’s Privacy Project, a California-based non-profit organization. Online data gathered can also be used in marketing housing, insurance, and financial services, Simpson says. For its part, Google policy explicitly states it will never sell users’ personal information or share it without their permission. Fertik says, “The word sell is very loaded. They share or trade data.”

But while members of the public say they are concerned about their online privacy, some studies show that they often do little to protect it — especially when it comes to what they share on social networking sites. Simpson says people need to be better educated about how to protect their data: A 2010 poll conducted by research firm Grove Insight for Consumer Watchdog said 86% of Americans favored the creation of an easy-to-use “anonymous button” that allows individuals to stop anyone from tracking them online. Others say consumers find the convenience of using one company’s myriad of integrated online services compelling. “There is a struggle between the titans of the Internet to provide a seamless experience that captures all your attention – and all your data,” Polonetsky says.