Google’s tight grip on the Internet search market is no mystery to any one. However, because it’s so big, Google has come under scrutiny from privacy watchdogs that fear Google might start knowing too much about its customers.

The European Union led the wave of criticism against Google, with British human-rights watchdog Privacy International putting the Mountain View behemoth on the last place in a top of companies that respect the privacy of their customers.

Among the companies accused of serious privacy breaches are high-profile names like AOL, Apple, eBay, Facebook, Microsoft, Yahoo and Hi5.

In March 2007, privacy concerns voiced soundly by human rights groups about the security of data gathered from users on the Web have determined Google to change their privacy policy, meaning that Mountain View server-logs will be annonymized after 18 months.

Despite Google’s pro-privacy policy, which recently translated into a shorter life span for its famous cookie, pressure coming from human rights watchdogs did not decrease.

Speculating the favorable moment, both Microsoft and Ask.com have announced “enhanced privacy protection” measures for those who use Live Search and Ask search engine respectively. The data protection will apply also to online advertisement.

For example, Microsoft will remove the cookie ID, the IP address and other identifiers from its servers after 18 months (the same as Google) and it will “also work to give customers more control over what information it uses to personalize their online search experience.”

Moreover, the Redmond giant will adhere to Network Advertising Initiatives (a cooperative of online marketing and analytics companies founded in 1999 and committed to building consumer awareness and establishing responsible business and data management practices and standards) by the end of this year.

“We have been thinking deeply about privacy related to search and online advertising and believe it is critical to evolve our privacy principles,” said Peter Cullen, chief privacy strategist at Microsoft. “We believe our enhanced principles should be part of the industry dialogue on this issue and that keeping these issues as simple as possible for consumers is the best approach. For instance, on search data, anonymous should mean anonymous.”

Last October, based on interest from customers, partners, educators, advocates and regulators, Microsoft publicly released its Privacy Guidelines for Developing Software Products and Services.

“We are entering a new age of innovative, competitive solutions to online privacy issues,” said Ari Schwartz, deputy director of the Center for Democracy and Technology. “By playing an active role in developing such approaches, and embracing a call for comprehensive federal privacy legislation, Microsoft is helping to lead the way.”

As to further prove its commitment to protecting users’ privacy, Microsoft joined Ask.com in a call on industry for optimized anonymity. The companies will work with other technology leaders, consumer advocacy organizations and academics to come together and join them in working on the development of these principles, which could include developing and sharing best practices to provide more control for consumers.

“As search and other online services progress, it’s important for our customers to be able to trust that their information is being used appropriately and in a way that provides value to them,” said Peter Cullen, chief privacy strategist at Microsoft. “We hope others in the industry will join us in developing and supporting principles that address these important issues. People should be able to search and surf online without having to navigate a complicated patchwork of privacy policies.”

“Anonymous user data can be very useful to enhance search products for all users, but people should have access to privacy controls based on their level of comfort around the storage of their search data,” said Doug Leeds, vice president of product management at Ask.com. “We’re committed to developing new ways to give consumers the control they are entitled to when it comes to searching online, and hope others will join us in engaging in dialogue on these important issues.”

Microsoft and Ask are inviting other companies involved in the Internet search business to a round-table dialogue meant at improving privacy in the context of online advertising’s proliferation. The companies will provide an update on their progress in September.