Creepy. The word was tossed around a dozen times in a morning session called “Hyper-Personalization” at Fortune‘s Brainstorm Tech conference.

If you think that the Internet knows too much about you — that you like United vs. Delta, the Yankees vs. the Mets, and that you’re hunting for a new job — just you wait. Right now, the Internet is in the primitive stages of personalization.

“It’s really early,” noted Marissa Mayer, Google’s (GOOG) VP of search and user experience. While hyper-localization — customizing online services to local markets — is a hot strategy for many Internet startups, from Foursquare to Groupon to Gilt Groupe, Mayer said, “Hyper-personalization may be even more interesting.”

The rising controversy — or creeping, um, creepiness goes beyond user anxiety about excess intimacy on the web. LinkedIn CEO Jeff Weiner said he believes that a lot of Internet users simply don’t like the identities that have been computed, however accurately, from their online behavior.

Indeed, said Jeff Bonforte, who runs a startup called Xobni that scrutinizes email behavior and then reorganizes inboxes and address books accordingly to increase productivity. When Bonforte revealed to some of his customers revised rank orders of their email contacts, many freaked out. Some asked: “How can you rank my co-worker above my wife?!”

When Bonforte checked “creepy” and “Xobni” on Twitter recently, “there were something like 744 Tweets,” he said.

Even as hyper-personalization expands — and Xobni and Google and Facebook feel the flak, inevitably — some good news for creeped-out consumers is that the companies that show sensitivity to privacy concerns will hold a distinct advantage. “Giving users transparency, choice and control is the key,” said Mayer.

Added Patrick Grady, whose Rearden Commerce provides highly personalized online assistant services to customers of J.P. Morgan Chase (JPM) and American Express (AXP): “If you earn the trust, it’s amazing what information the user will give you.”