"Industry is fearful of the new Democratic majority at the FTC and a new serious commitment to address privacy," said Chester, executive director of the Center for Digital Democracy, a digital rights group. "Commerce is the wrong place to protect consumers."

The Commerce Department and the Obama administration have an interest in protecting U.S. companies, and Google, in particular, has strong ties to the White House, Chester said. Those ties "place consumer privacy further at risk," he said.

The Commerce Department appears to be headed toward minimal privacy regulations, with online companies allowed to continue their data collection practices, Chester added. The White House last month, with a focus on creating new legislative proposals.

Representatives of Google and Facebook, two companies that have faced privacy criticism in recent months, declined to comment on the Commerce Department's privacy activities.

FTC officials downplayed the possibility of conflicts between their agency and the Commerce Department. Commerce has included the FTC in its privacy deliberations, and there are enough privacy issues for both agencies to tackle, said a source familiar with the FTC.