Assume that I, without your permission, install a keylogger on your home computer that records everything you type and sends it back to me. Clearly, I have violated your privacy, and probably exposed myself to civil liability as well (e.g., trespass to chattels, as described here). Change the scenario slightly. Assume that you and I meet, and you agree to allow me to install a keylogger on your home computer that records everything you type and sends it back to me. That magic element of authorization changes what would be a privacy violation and a lawsuit into a straightforward agreement between two people. Now change the scenario slightly again. Assume you buy a product from me, but, before the product can be used, you have to agree to a 15,000 word contract which includes as one of its provisions an agreement that a keylogger will be installed on your home computer which records everything you type and sends it back to me. Before arguing that the license couldn't possibly be upheld, think again, clickwrap licenses are routinely upheld as valid contracts by US courts (as described here). Before arguing that no legitimate business would ever put such onerous terms in a license, consider that the terms of service for the new iPhone state that Apple may monitor the users' phones (NOTE: I do not own an iPhone. My knowledge of their terms of service is based on this article).
So what does all this mean for privacy? Well, I think it means that privacy is basically dead. It's insane to think that consumers will actually read and understand the multitude of licenses they are presented with (the iPhone license is 17,000 words long, and apparently so convoluted that many lawyers can't understand it). It's also insane to think that consumers are going to stop buying new products, or that businesses are going to stop using clickwrap licenses. The result is that, as businesses realize that they can get consumers to agree to literally anything, consumer privacy is going to be killed by new consumer toys and the licenses that people will agree to to get them.