When Bitcoin was created privacy was not in mind, Bitcoin is a public blockchain and it was created that way. Addresses, balances and transactions are public for anyone to search and track, while that provides transparency, it also lacks privacy.
As a result this lack of privacy can be used by blockchain analysis tools. They work on the principle that in most transactions with more than one input, all of these input addresses belong to the same entity, which can be traced back to its source IP.
This allows companies and governments to track an entity from one address and accurately guess its transactions and holdings in other addresses.
A group at Blockstream recently worked on a new type of transaction aiming at invalidating this principle, Pay to End Point aims at allowing both the sender and the receiver to sign inputs in the transaction, ensuring enough of these transactions exist on the blockchain will invalidate this principle and boost privacy for all Bitcoin users.