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Privacy by Default: Why Facebook is Opposed

As many are already familiar, Facebook just admitted it was responsible for a PR effort to plant negative stories in the press about Google and its cavalier attitude toward user privacy. Google was quick to point out that Facebook has come under fire for this very same issue. But behind this recent back-and-forth, is the hot button issue of privacy protection, and California’s first-of-its kind proposal –  SB242 – to regulate social media sites, beginning with mandating new privacy policies.

Facebook may have brought this renewed interest in industry regulation upon itself when, in December 2009, it made all private data available to the public with no prior notification to subscribers, and more recently for its plans to disclose users’ home addresses and mobile numbers to third party application developers.

State Senator Ellen Corbett, sponsor of SB242, says “You shouldn’t have to sign in and give up your personal information before you get to the part where you say, ‘Please don’t share my personal information.'”  Under the California proposal, it would be required for a “social networking Internet Web site to establish a process for new users to set their privacy settings as part of the registration process that explains privacy options in plain language, and to make privacy settings available in an easy-to-use format”. In other words, Facebook and other companies would have to allow users to establish their privacy settings at the creation of an account instead of after joining, or risk paying a steep fine. This seems reasonable enough, so why is Facebook, along with a coalition of industry associations and internet companies (including Google, Twitter, Zynga, Match.com, and Skype) so opposed to making the privacy settings more transparent to users?

Here’s a summary of the group’s oppositions [1] (By author Liz Gannes):

Aside from the obvious point that no industry likes to be regulated, the third bullet is perhaps the biggest reason for concern for the companies in question. In addition to requiring a more transparent privacy policy, the bill would also require “various prohibitions with regard to disclosures of personal information related to, among other things, driver’s licenses, social security numbers, and direct marketing”.

Facebook’s business model and revenue stream relies heavily on data mining its users’ personal information and repackaging and selling that information. Limiting user participation in this process would greatly affect Facebook’s bottom line. Google and other companies have the same concerns, which creates the odd arrangement of Facebook and Google fighting it out in the press, but allying with one another to stop this legislation.

So the bigger questions are:

The California legislation intends for Facebook to be completely up front about how it plans to use someone’s personal information so a user can make an informed decision to decline or accept the terms of service.  Some users may welcome demographically targeted ads and games, while some may prefer to use the service solely for keeping in contact with friends and family. As data mining and micro-targeted advertising becomes a larger and larger share of online revenue, this issue will become more and more prominent for all parties concerned.

About Ami Grant

Ami joined The Search Agency in 2004 and has over 9 years of online marketing experience both on the publisher and agency-side. She is responsible for SEM campaign management, strategy, and maximizing ROI. Before joining TSA, Ami was a Senior Content Solutions Editor at Yahoo! Search Marketing, where she spent over 2 years optimizing accounts through keyword generation, creative development, and landing page recommendations. Ami is originally from Austin, TX and holds a Bachelor of Arts in English at the University of Texas at Austin. She is also a certified Google AdWords Professional and SEMPO–LA Chapter Member.