The European Commission will investigate how consumers' online data is used by search companies, social networking sites and internet service providers.
Officials are particularly concerned about the growing use of deep packet inspection techniques that allow broadband providers to track online activity even if consumers have tried to delete tracking cookies set by the websites they visit.
Consumer affairs commissioner Meglena Kuneva will claim on Tuesday that the terms and conditions to which people agree in order to gain access to some commercial web sites frequently breach privacy rules. She wants to introduce a blacklist of misleading terms similar to lists that exist for offline marketing companies.
"Trading your personal data in return for free web-based services is increasingly becoming the norm on which companies build their business models," said Helen Kearns, Kuneva's spokeswoman. "The Commissioner wants to make sure that people are aware of this and that they aren't tricked into handing over more than they want to," she added.
Personal data is "the new petroleum of the Internet world - a vital and valuable commodity. If you are happy trading your data that's fine, but you should at least know how valuable it is," she said.
"It wasn't regulators who spotted the proposed change of terms at Facebook, it was one of the 175 million users," Kearns said.
"The Commissioner doesn't want to obstruct this advance in the online world. She recognises that it offers consumers fantastic opportunities. But she won't tolerate foot-dragging by companies when it comes to respecting people's personal data. If the companies can address the issues themselves that's fine, but Kuneva won't accept a world wild west when it comes to online privacy," Kearns said.