It is an extraordinary market play. And an unsettling one. For it seeks to place Google (GOOG), which already collects vast amounts of data about our Internet use, at the very center of our information experience.

The privacy implications are, of course, horrendous. And while Google will inevitably dismiss such concerns as paranoid and argue that any data the company might collect at the OS level will be used only to improve its services and benefit users, it should still give us all pause. Because when it is finally launched, Chrome OS will be yet one more deep well of consumer data to which Google will have access.

There are already quite a few such wells, including Google Search and Chrome, that profile user interests and surfing habits: Gmail, which gives the company access to our email conversations, and Google Voice, which gives the company access to our spoken ones. Add to this Google Street View and Latitude, a service that tracks the physical location of its users, and mobile and desktop operating systems and, well…that kind of consolidation of Internet-based services around a single dominant company should give us all pause.

Lest we forget, Google is in the behavioral targeting business. Why would people ever use an OS developed by a company whose business is based on meticulously recording and analyzing their online behavior? Because they enjoy using its other services, I suppose. But there is a privacy-vs-ease-of-use tradeoff here. And with Chrome OS, it is unprecedented. Further, while Google might tout its “don’t be evil” motto as reason enough to trust the company with our data, there are other entities that don’t always share that sensibility. Remember, it wasn’t so long ago that the federal government tried to force Google to turn over user search data to the Justice Department…

“Competition in the OS market should always be welcome, but Google is the special case,” Marc Rotenberg, executive director of the Electronic Privacy Information Center, told Digital Daily. “It has become dominant across many essential Internet services–search, mail, video, online apps, and advertising. Coupled with Google’s growing profiles of American consumers and reluctance to adopt meaningful privacy safeguards, we expect that antitrust authorities in the US and Europe will view Google’s entry into the OS market with enormous skepticism.”

Jeff Chester, executive director of The Center for Digital Democracy, echoed Rotenberg’s concerns. “Google’s new OS has to be placed under the data collection X-Ray by US and EU privacy regulators and advocates,” he said. “Any expansion into the marketplace by either Google or Microsoft should generate intense scrutiny, especially for the privacy implications. These two are engaged in a global data collections digital arms race, which has far-reaching implications for consumers and their information.”

For instance, BoomTown was in Rome earlier this week attending a conference on business, brand and innovation that happens only once every seven years–and one of the biggest takeaways? Hardly any Italians have heard of Twitter, and those who have don’t really use it. Well, that, and conversations with Arianna Huffington, Reid Hoffman, and several Italian business leaders. Mark Zuckerberg, though, is most definitely plugged into the white-hot microblogging service. This week, he used his Twitter account, plus an appearance on “Oprah,” as a platform to herald the launch of Facebook’s own Twitteresque homepage redesign. In other news, Time Warner (TWX) CEO Jeff Bewkes laid off AOL President and COO Ron Grant and Chairman and CEO Randy Falco. BoomTown interviewed Falco’s replacement, Google (GOOG) ad sales exec Tim Armstrong, who’ll start at AOL as Chairman and CEO on April 7.

MediaMemo had the full memo from Time Warner on the Falco/Grant-Armstrong transition and also spoke with Boxee CEO Avner Ronen this week. Boxee is the start-up that lets you watch Web video on your TV, basically bypassing your cable box. Which is probably why it’s caught up in a cat-and-mouse game with Hulu, the joint venture between GE’s (GE) NBC and News Corp.’s (NWS) Fox that would much rather have you watch TV on the Internet instead. Guess who’s the mouse? Still, Hulu is down two networks, ABC and CBS (CBS)–though presumably, the aim is to offer all three. (News Corp. is the owner of Dow Jones, which owns this Web site.) MediaMemo also noted that Google rolled out its behavioral targeting functionality this week and points out that we all might be hearing a lot more from a man named Rick Boucher in the near future as a result.

Behavioral targeting wasn’t the only thing that Google rolled out this week–it also launched Google Voice, the initiative based on the company’s acquisition of voice communications start-up GrandCentral. Digital Daily covered the story. Elsewhere in the telecom world, major Palm (PALM) investor Roger McNamee made some bold (read: crazy) assertions about iPhone users switching en masse to the Pre, which later needed to be clarified (read: backed away from) by Palm itself. RBC analyst Mike Abramsky is also bullish on the Pre and its WebOS, but in a less crazy way. He gave it a glowing write-up on Friday. For a product that hasn’t yet been given a price or a launch date, it’s certainly building itself some high expectations. Of course, it’ll need to fulfill them to compete with the ever-evolving iPhone, which for which Apple (AAPL) is having a press event Tuesday to announce version 3.0 of the device’s OS.

Walt Mossberg reviewed the new version of Apple’s ever-evolving iPod Shuffle this week, which has the distinction of being the first mp3 player to “speak.” His verdict was in Wednesday’s Personal Technology column. In Mossberg’s Mailbox, Walt answered questions about using a stylus with the iPhone and offered an explanation on how to change Apple’s Safari 4 beta so that it looks and works more like the previous version. And in this week’s Mossberg Solution, Katie Boehret took a look at iSkoot’s Notifier, an app designed to endow basic cellphones with smartphone-like capabilities.

More next week. And beware the Ides of March. Or not.

To date, 27of the 33 have responded, among them Google and Yahoo, whose replies are of particular interest given the proposed advertising deal between them. In response to the Committee’s query, Yahoo admitted it did engage in some form of behavioral targeting, but volunteered that it would henceforth allow users to turn off targeted advertising on its Web sites.

Yahoo claims it had been planning this revision to its policy for months. What a happy coincidence that it was enacted in time to be included in the company’s letter to the Committee.

Google also acknowledged using targeted-advertising technology without explicitly informing customers–hence, its $3.1 billion acquisition of DoubleClick. And it too suddenly offered its users a way to opt out of targeted advertising. Another happy coincidence, I suppose, in the works for months and entirely unrelated to the company’s pact with Yahoo, which would reportedly grant Google control over more than 80 percent of the search market.

Still, it’s good news for consumers–or rather those consumers who actually pay attention to such things. And for those who don’t, a word of advice: It might be time to start. Because Google, which already controls more than 70 percent of the search market in the states, clearly sees quite a bit of behavioral targeting in all our futures. “Though it is not the focus of our business today, we also believe that behavioral advertising can be done in ways that are responsible and protective of consumer privacy and the security of consumers’ information,” Google wrote in its letter to the Committee. “To ensure the continuation and proliferation of responsible behavioral targeting practices, we are supportive of efforts to establish strong self-regulatory principles for online advertising that involves the collection of user data for the purpose of creating behavioral and demographic profiles.”