But other speakers at the TPI event suggested that the U.S. Congress does need to pass some online privacy rules.

While targeted advertising serves a useful purpose, consumers deserve to know who's collecting their data online and how it's being used, said Representative Cliff Stearns, a Florida Republican. Stearns predicted that Congress would release a draft of privacy legislation later this year.

However, Stearns also called for lawmakers to move cautiously. Although some have called for legislation that would require online businesses to get opt-in approval from consumers before collecting any information, Stearns said such a rule would go too far.

"It's easy to demagogue this issue and say consumers have a right to know everything and nothing happens unless you get their name on the bottom line," he said.

Leslie Harris, president and CEO of the Center for Democracy and Technology, and Alan Davidson, director of U.S. public policy for Google, disagreed with the TPI paper's premise that there are trade-offs between privacy protection and data-based Internet services. Transparency about data collection is necessary, Harris said, so that consumers will have confidence in online services.