“We are not as concerned about Facebook’s privacy policies being enforced,” said Justin Brookman, director of the Center for Democracy and Technology’s Consumer Privacy Project. “We are more concerned with what the privacy policies are in the first place.” While Brookman added that Facebook has done marginally “better” with regard to privacy practices over the last year, Jeff Chester, executive director of the Center for Digital Democracy, and author of “Digital Destiny: New Media and the Future of Democracy,” said it is still a case of users beware.
“Facebook has made their privacy settings difficult for users, and now with the IPO there will be tremendous pressure on Facebook to concentrate on their advertising and marketing. This is not just an issue for U.S. based users – this is a global issue. We have regulations here, but users in say, Asia, are less protected,” Chester continued. “Facebook will ratchet up how it spies on its users to ensure that users are manipulated into buying products from big brand marketers featured on their Timeline.”
Leading up to the IPO on May 18, an AP-CNBC survey found that 59 percent of those polled said they “have little or no faith in the company [Facebook] to protect their privacy.” While 60 percent of respondents were active users, 21 percent of non-Facebook users cited privacy issues as their reason for not joining. Only 13 percent of those polled said they thought their private information was safe. As indicated by growing numbers of users – and while counterintuitive – it seems that those who distrust Facebook continue to use it.
In response to the Irish Data Protection Commissioner (IDPC) requesting that Facebook expand its data and privacy practices by spring 2012, Facebook's Chief Privacy Officer Erin Egan held a question-and-answer session on May 14 which was streamed live on the company’s site. “That’s a big driver of our changes,” she said of IDPC’s inquest. “In addition to the feedback from users and the introduction of new products and services, like Timeline,” Egan continued. “Our goal here is to be really transparent with you about our practices.”
Spies like Us
It wasn’t long ago – October 2010 – that Facebook admitted, after a Wall Street Journal investigation, that its top 10 user applications, including Texas Hold’em and Farmville, shared user data via http referrer applications. In short, users' names, and also their friends' names were passed along to third party advertisers.
What was perhaps most galling to impacted users and the Federal Trade Commission (FTC), was that many of these affected users had deployed Facebook’s hard-to-traverse, stringent private policy settings – a 7,000 word cumbersome document. The probe also found that Facebook had previously transmitted user ID numbers to advertising companies via clicked-on ads. Last November, Facebook settled a case with the FTC about related incidents.
“Facebook now has one of the most robust audits in place with the Federal Trade Commission and this will occur for the next twenty years,” said Markham Erickson, partner at Holch & Erickson LLP where he represents clients before federal regulatory agencies, courts and Congress.
Facebook’s prior track record isn’t encouraging, either. On November 6, 2007, the company launched Facebook Beacon, a failed attempt to advertise to friends of users by using the knowledge of what purchases friends made (a revamped version returned in May 2011). In February 2009, a New Terms of Service was unveiled, essentially broadcasting that Facebook could do as they pleased with aggregated information – forever. That movement was countered by the Electronic Privacy Information Center that filed a complaint with the FTC. While Facebook has instituted a user voting system for privacy changes – a global advocacy movement growing in 2012 – problems remain.
“Historically, Facebook has had trouble with users who accidentally shared more information than they wanted to,” said Brookman, whose previous post was chief of the Internet Bureau of the New York Attorney General’s office. “Users should be encouraged to understand and investigate what each application does. It’s understandable for users to be skeptical about Facebook, and Facebook earned that. They [Facebook] will have to continue to improve their privacy chops if they want users to continue to engage in the way they want users to.”
Does Facebook “like” Regulations?
As with all publicly traded companies, Facebook and its “hoodie” leader, Mark Zuckerberg, must comply with all regulatory bodies such as the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission’s Regulation S-P which states: “firms are required to have policies and procedures addressing the protection of customer information and records. This includes protecting against any anticipated threats or hazards to the security or integrity of customer records and information and against unauthorized access to or use of customer records or information.”
Erickson is well versed in privacy matters, as he has helped to write and negotiate countless federal laws governing e-commerce, technology and the use of the Internet. These include the CAN-SPAM Act, the Children’s Online Privacy Protection Act, the Digital Millennium Copyright Act and the Communications Decency Act. As the Executive Director of the Open Internet Coalition, he also advocates for Google, Facebook, PayPal, Netflix, Skype, Sony, Twitter, Amazon and TiVo, among others.
“If Facebook violates the agreement with the Federal Trade Commission, they can be taken to court and penalized, which would have considerable downturns with regard to consumer reputation,” said Ericson. “With almost a billion users, Facebook’s growth rate has been fairly consistent, so moving forward, the trust they have with their user community has to be robust or they stand the chance of losing their user community, and Facebook is well aware of that.”
Chester is not as optimistic about Facebook’s intentions and said that while well intended, the FTC seemingly views Facebook as too complicated a medium to understand in terms of data collection. “There really is no regulation for Facebook. What they did was sign a twenty year consent decree. You could look at it like a de facto regulation that says that Facebook will create products and services with privacy in mind, but they have no intention of doing that,” said Chester.
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