Administration backs online privacy legislation for the first time

Strickling said he wants to see a "flexible" regime that protects consumers and ensures international interoperability. 

Privacy legislation is already underway in the Senate, including a promised bill from Communications subcommittee Chairman John Kerry (D-Mass.), whose brother Cameron Kerry has also zeroed in on the issue in his counsel role at the Commerce Department. 

Testifying at the hearing, FTC Chairman Jon Leibowitz said his agency is pushing for a Do-Not-Track system led by the private sector. He said privacy controls from Microsoft and Mozilla show this option is "viable."

"Consumers deserve meaningful and not illusory control over what companies can do with their personal information," he said. 

Some speakers made efforts not to vilify the online ad industry, which targets online ads to Web users according to preferences it gleans from their browsing habits. 

"I don't mind being given targeted ads," Leibowitz said. "I think there's a real benefit in that, but consumers should have a choice about whether they want to be tracked."

Sen. Claire McCaskill (D-Mo.) raised concerns about what the cost would be "in terms of the economic vibrancy" of the Internet if tough strictures are passed. She warned of "unintended consequences."

Leibowitz said that "if consumers have more trust on the Internet, they are going to do more business on the Internet, as well."