ShareThis is another company that does pretty much the same thing. Their share buttons are down at the end of the post. AddThis is bigger. It provides "behavioral, contextual, and interest based data that spans across hundreds of content categories and topics, reaching 1.7 billion uniques a month."
The widgets help users share your content. At the same time, AddThis and ShareThis widgets help a publisher figure out who is sharing what, while distributing the content into other websites. To do this, they track users, see what sort of web sites they like. They can also work with advertising networks to improve the relevancy of ads shown to users. The user tracking works by setting user cookies, or "web beacons" that enable the tracking of users across websites. In the case of AddThis, users are also tracked using "Canvas Fingerprinting", a technique that works even when a user blocks cookie tracking. ProPublica recently wrote about this technology, calling it the "Online Tracking Device that's Nearly Impossible to Block".
In some cases, if you have chosen to make PII (like your name) publicly available through third party sites like social networks, we may seek your consent to use that PII in connection with services we offer in conjunction with our partners. We will not disclose your PII without your consent.Similarly, AddThis says:
We and our publisher, advertiser and ad network partners also use this data for other related purposes (for example, to do research regarding the results of our online advertising campaigns or to better understand the interests or activities of users of the ShareThis Services).
When an End User downloads a page that contains an AddThis Button, we may deploy a cookie on our own behalf or on behalf of our data partners, to record information about how an End User uses the web, such as the web search that landed the End User on a particular page or categories of the End User's interests. We may use the Data to target advertising toward the End User or authorize others to do the same.Many websites are using Google Analytics to measure usage; they let Google track their users in the same way (the website I run, Unglue.it, uses Google Analytics). However, the Analytics terms of service seem not to allow Google to share the collected data as freely as AddThis and ShareThis do.
Both AddThis and ShareThis assert in the legal terms that they mustn't collect usage information from children, so if children use your site, you're not supposed to use these services. Google Analytics does not have this restriction, which presumably means they can't use their data to advertise to children.
Together with "Cookie Syncing" and "Evercookies", the cumulative effect of all this tracking is that website users can be pretty comprehensively tracked, and if need be, identified, whether they like it or not. In exchange for deploying the trackers, websites get access to the valuable pool of information about their users.
Matt Mullenweg (of WordPress) has an interesting perspective:
It's true that these trackers are very common- even WhiteHouse.gov has employed AddThis buttons. But it seems to me that if libraries still think that user privacy is valuable in this age of social media, they need to rethink out their use of web user tracking companies. What disturbs me most is there hasn't been much public discussion about the future role of privacy in library websites, even as it's rapidly being lost.
Update (Aug 15): AddThis says they're not using canvas fingerprinting and have terminated their test of it. I don't think this really changes the cost/benefit analysis for libraries. It remains true that libraries that use AddThis or ShareThis are allowing a third party to track their patrons' catalog browsing (not just their social sharing), under terms which permit the companies to use the data for advertising purposes. Use of Google Analytics allows Google to do the same tracking, but does not appear to permit use for advertising. Either way, libraries need to make informed choices and communicate those choices to their users. Same for Facebook "Like" buttons. Commercial sites, obviously, have different priorities and responsibilities.
Update (Aug 19): There are a number of free open-source solutions available both for social sharing and for analytics. There's a very useful discussion of these issues on Hacker News.