United States ISP Charter Communications announced that it will start looking at your surfing behavior to find you relevant ads.
While continuing to deliver the same fast and reliable Internet service you’ve always received, innovative new technology in the field of online advertising enables Charter to provide you with an enhanced online experience that is more customized to your interests and activities. As a result of this service, the advertising you typically see online will better reflect the interests you express through your web-surfing activity. You will not see more ads – just ads that are more relevant to you.
While Charter is probably the first ISP to do this, it's already being contested as a heavy invasion of privacy as well as something heavily questionable since any ISP can swap out AdSense IDs for their own and monetize off their members' clicks.
Will anything be done? That's the question. Will Charter get away with it? Perhaps websites will need to block Charter Communications from overriding their own ads (and consequently "defacing a third party website") -- by not letting Charter in at all.
Legally, this can be a problem as well. It may be copyright infringement if they're taking a website served by another company and just replacing ads.
But this may also cause another problem for publishers: if this gains traction, more users will start using ad-blocking solutions that may not necessarily bode well for those who are trying to make a buck off of their hard-earned work. As a statement to Charter, they may install some software to circumvent the ads, but other people will end up suffering as a result.
Overall, the forum members are appalled and think that it won't pass in a court of law. I'm not a Charter Communications user (thankfully), but I'd hope they don't get away with this myself.
Forum discussion continues (and it's long and more informative than this post!) at WebmasterWorld.