This paper critically explores, from a political economy perspective on public policy, the commodification of privacy on the Internet as a practical-economic and a discursive process. On the one hand, dominant online business models conflict structurally with users' need for privacy and the users themselves work on their own powerlessness in this regard. On the other hand, there is a privacy discourse that is possessive individualistic in nature but broadly informs the public policy process. It is argued that this discourse is not suitable to prevent economic-practical commodification of personal data and its problems. Criteria and strategies for improvement are identified, and concrete legal, self-regulatory, and technical implications for public privacy policy are derived. This paper uses material from a qualitative interview study and the example of social networking sites to exemplify its theoretical claims. Copyright The Author 2013. Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oup.com, Oxford University Press.