At the first of three round-table events hosted by the Federal Trade Commission, commissioner Pamela Jones Harbour argued that the technology used to track people online is advancing at least as fast as the steps being taken to protect people’s privacy. “We have entered a digital arms race,” she said, “and the current outlook is troubling”.

She called industry attempts to provide notice and choice “insufficient”.

Also yesterday, Yahoo unveiled a beta version of a tool called Ad Interest Manager, which allows users to opt out of targeted advertising on its sites and to see a short summary of what Yahoo knows about their demographics and online activity.

Yahoo’s vice president of policy and head of privacy, Anne Toth, said: “Yahoo is committed to providing consumers with increased transparency and control when they are online. Ad Interest Manager will show users what interests we think they have, and also let them edit and change those interests to reflect the most up-to-date information. Importantly, users who don’t want interest-based ads can turn them off completely.”

But critics have said that such initiatives by firms including Yahoo and Google are half-hearted, calling for more effort to be made to make the public aware of the opt-out options, and to make them easy to understand, find and use.

The Future of Privacy Forum think tank has suggested placing small logos on targeted ads to alert web users that they have been served an ad based on their online behaviour.

A second round-table event in California in January will look at the interplay between privacy and technology, with a third event planned for Washington DC in March. The FTC will then consider next steps, which could take the form of a report or set of recommendations to Congress.