It has been a week of regulatory decisions on internet privacy issues.

The UK’s Office of the Information Commissioner has given the go-ahead for Phorm, the targeted advertising company to start trials with BT. While the ICO statement of this is not exactly a ringing endorsement of the service, it doesn’t raise any insurmountable concerns. Phorm is still under close scrutiny, but for now, allowed to go ahead.

At the same time, the Article 29 Working Party has finally published its opinion on data protection issues related to search engines, going much further than some observers expected. Search engines are to be required to delete search logs after only six months compared with 18 currently for Google and 13 for Microsoft and Yahoo.

There is still much puzzling over the exact interpretation of the dense document, but under some of the strictest readings it suggests that even the search terms you type into a search engine are personal information and should not be used without your permission for other purposes. In other words, they shouldn’t be used to send you targeted ads, an interpretation that would entirely undermine Google’s business model.

It seems unlikely that the rules will be taken to this extreme, but it is clear there is a clash coming between Google and the European regulators on the recommendations. Google maintains it needs server logs for 18 months – some European regulators say even 6 months are too much. After a year and a half of talking, neither side has convinced the other. It doesn’t bode well for finding a compromise from here.

The Phorm and Google cases show that regulators have fallen out of sync with public opinion on these matters. For internet users, Phorm is the easier to hate, because noone really likes advertising. Google, on the other hand, provides a useful service and is forgiven for much.

The regulators, however, appear to see Google as the more problematic of the two. It is OK to target people with ads as long as it is done anonymously, without identifying people. What is not OK is having a lot of personal details sitting on company servers, however unobtrusively they may have been collected and used.

Mark Zuckerberg scored a coup on Tuesday by recruiting one of Google’s top stars to take the number two spot at Facebook, the fast-growing social network.

Among other things, Sheryl Sandberg’s appointment as Facebook COO will bring some adult supervision to a company that, for all the buzz and excitement,  manages every so often to remind the world that it is being run mainly by twenty-something computer geeks.

Sandberg, 38, graduated near the top of her class from Harvard College and Harvard Business School before serving as chief of staff to US treasury secretary Lawrence Summers during the Clinton administration. She joined Google in 2001, where she was responsible for developing the search giant’s wildly successful ad sales programmes. She also played an important role in launching Google.org, the internet group’s philanthropic arm.

Having captured the attention of millions of internet users, Facebook’s biggest challenge over the next year will be to deliver its own equivalent of AdWords - a technology capable of turning all those eyeballs into a reliable revenue stream.

Facebook tried to do just that last year with the launch of several new ’social’ ad technologies, including Beacon, a messaging service that broadcasts purchases made by users on outside web sites to their Facebook friends.  Mr Zuckerberg hailed the new technologies as a once-in-a-hundred-years innovation in advertising, only to see them overshadowed by a user revolt over privacy.

With Ms Sandberg on board, Facebook has an opportunity to move beyond this somewhat ham-fisted attempt and find a sustainable revenue model that takes advantage of the social connections between the site’s millions of users. There is no doubt that the raw materials are there. It may just take an experienced hand like Ms Sandberg to make things fall in line.

The downbeat report on click-through rates that sent Google’s shares down 4.6 per cent on Tuesday is sure to rub salt in the wounds of shareholders who were already stinging from a sharp drop in the search group’s share price this year. Many will be anxious to determine whether the data from ComScore, which showed flat growth in the rate at which web surfers click on Google’s ads in January, is merely a blip or a sign of something more ominous.

Setting aside the very real possibility that ComScore’s report was a statistical anomaly, there are two scenarios that might explain a fall-off in the click-through rate for Google ads. Neither of them is encouraging.

The first scenario is that the apparent drop in click-through rate is due to Google’s recent attempts to boost ad quality by cutting down on the number of ‘accidental’ clicks made by users. Google said earlier this month that its crackdown on unintentional clicks had contributed to its disappointing results last quarter. But the magnitude of the drop reported by ComScore - from 27 per cent growth in November to 13 per cent growth in December to decline of 0.3 per cent in January - suggests that the trend could be more severe than previously thought.

A second - and probably less likely - scenario is that the decline was caused by a change in the shopping habits of online consumers. The reasoning is that consumers who are worried about a recession might be less inclined to click on Google’s ads because they have decided to delay online purchases. If this were the reason behind the flat click through rates, it would suggest that Google is more vulnerable to a recession than some have predicted.

With Google’s shares already off almost $300 per share from their November highs, investors are surely hoping there is another explanation for the ComScore numbers - one that leaves them a little more room for optimism.