In this manuscript, we study preconditioning techniques for optimal in-domain control of the Navier-Stokes equation, where the control only acts on a few parts of the domain. Optimization and linearization of the optimal in-domain control problem results in a generalized linear saddle-point system. The Schur complement for the generalized saddle-point system is very difficult or even impossible to approximate. This prohibits satisfactory performance of the standard block preconditioners. We apply the multilevel sequentially semiseparable (MSSS) preconditioner to the underlying system. Compared with standard block preconditioning techniques, the MSSS preconditioner computes an approximate factorization of the global generalized saddle-point matrix up to a prescribed accuracy in linear computational complexity. This in turn gives parameter independent convergence for MSSS preconditioned Krylov solvers. We use a simple wind farm control example to illustrate the performance of the MSSS preconditioner. We also ompare with the performance of the state-of-the-art preconditioning techniques. Our results show the superiority of the MSSS preconditioning techniques to standard block preconditioning techniques for optimal in-domain control of the Navier-Stokes equation.