Amazon's most significant announcement on Wednesday was not the introduction of its Kindle Fire tablet. Rather, it was the Web browser that will ship with the Kindle Fire, Amazon Silk.

Amazon Silk is based on WebKit, the open source browser engine that forms the foundation of the Apple Safari and Google Chrome browsers. But Silk's technical ancestry isn't as important as its split personality: Silk can operate as a traditional browser, in "off-cloud mode," but it also can take advantage of Amazon's cloud computing infrastructure to optimize Web page files so they load more quickly.

In "cloud mode," Silk relies on Amazon Web Services as a proxy service: Amazon becomes the middleman responsible for fulfilling the user's Web page requests. Imagine how useful all that data will be to Amazon as business intelligence.

Chester Wisniewski, senior security advisor at Sophos Canada, says Silk presents an obvious privacy problem. "All of your Web surfing habits will transit Amazon's cloud," he wrote in a blog post. "If you think that Google AdWords and Facebook are watching you, this service is guaranteed to have a record of everything you do on the Web."

[ Take a visual tour of Amazon's forthcoming Kindle Fire. ]

What Amazon is doing isn't unprecedented. The Opera Mini browser relies on remote servers to optimize Web data. BlackBerry browsers may be assigned to a BlackBerry Enterprise Server, which serves as an intermediary between the user and the Internet.

Like an ISP, Amazon will have access to data about the Internet activities of Kindle Fire users. Indeed, Amazon compares Silk's awareness of its users to that of an ISP.

"[L]ike most Internet service providers and similar services that enable you to access the Web, the content of webpages you visit using Amazon Silk passes through our servers and may be cached to improve performance on subsequent page loads," the company states in its Silk Terms & Conditions.

Amazon notes that it temporarily logs Web URLs and identifiers like IP and MAC addresses to help with technical issues. "We generally do not keep this information for longer than 30 days," the company states, which means there may be circumstances when data is retained for longer periods.

But unlike an ISP, Amazon will also be presenting SSL certificates on behalf of users, and will thus have even more intimate knowledge of what users are doing online.

As Wisniewski observes, a U.S. court order would make it easy to monitor the online activities of a Kindle Fire user, at least in "cloud mode." Other governments are also likely to see Amazon as a one-stop data shop for Kindle Fire users, to judge by RIM's experience in India and the United Arab Emirates.

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