No surprise here – I’ve known Google’s Age of Innocence has been over for at least two years though TechCrunch asks if 2008 Will Be Google’s End Of Innocence?

And now I hear something about the Google Toolbar a Trojan Horse for Ad Targetting? (Ballmer Plays The Privacy Card).

The rumor came to us via an online measurement startup that expects Google to make an announcement about a new service leveraging the Google Toolbar at the upcoming Audience Measurement 3.0 conference later this month, which Google is sponsoring.

The rumor could be an attempt to spread FUD, but it is not just startups that are playing the privacy card. In a discussion with Washington Post editors and reporters on June 4th, Microsoft CEO Steve Ballmer raised a similar privacy issue in relation to the Dell deal (see video below):

Why is that toolbar there? Do you think it is there to help you? No. It is there to report data about everything you do on your PC.

Since the Google Toolbar can track every site you visit, that data could theoretically be used to target ads served by Google (including DoubleClick display ads anywhere on the Web, or to further refine search ads). For instance, you could browse a Lumix digital camera on Amazon, and then see ads for digital cameras when you land on an unrelated travel site that happens to serve up DoubleClick ads. Or perhaps the next time you do a search on Google, it will push a Lumix ad out to you. Google could also use the data to create a Web measurement service that competes with comScore, Quantcast, Hitwise, or Compete.

These are all hypothetical at this point. But there is nothing stopping Google from doing so. Per Google’s general privacy policy, it reserves the right to process “personal information” for the purpose of:

I don’t know about the Tool bar – almost everyone had one – but no one had the infrastructure or reach that Google did – things they could do with that data are pretty amazing – but then again, not “innocent”.