In the US, the Federal Trade Commission has legal jurisdiction to engage in activities with the goal of "protecting America's consumers." These activities include policing the use and abuse of individual consumer data by companies.
Companies protect themselves from FTC investigation in a generic way by producing a document called a Privacy Policy. This document, traditionally using legal language- though recently the FTC has encouraged the use of plain, common-sense language, despite its lack of legal precision- states what personal data the company collects, how it uses it, with whom it shares it, etc.
A Privacy Policy, along with a Terms of Use, creates a kind of informal contract between the consumer and a company whose services the consumer is using. The consumer is obliged to use the services in accordance with the Terms of Use, and the company is obliged to abide by the terms of the Privacy Policy.
That said, both are authored by the company and represent the company's perspective. So Terms of Use are usually explicit and concrete about what can and cannot be done by consumer users, Privacy Policies are usually jargon filled and abstract with the intention of providing companies a lot of leeway in their actual technical practices.
Privacy Policies are documents that are largely mechanisms for self-policing, rather than mechanisms for regulation, from a legal perspective.