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The Perils and Promise of Online Schmoozing

By Jane Black They say everyone is connected to everyone else in the world by no more than six degrees of separation. Now a new set of dot-coms such as Friendster, Ryze, and are putting that notion to the test, allowing individuals to create an electronic Web of friends, families, and business contacts, who in turn, are connected to their other friends, families, and business contacts. The idea: By linking each of us into a broad but still relevant network, I can find whatever I'm looking for -- a date, a new job, or a used TV.

The concept has certainly caught on. Social-networking sites have attracted more than $40 million in venture-capital money since last fall. In January, Web behemoth Google entered the fray with its own social-networking site, Orkut. But this is no dot-com bubble, with VCs and companies seeing promise where real people don't. Through my 12 friends on Friendster, I'm currently connected to a "personal network" of 130,834 people.

Social networks offer a way to create far more sophisticated and nuanced human interactions than those provided by a personal Web page or its more interactive cousin, the blog (see BW Online, 6/10/03, "The Wild World of 'Open Source' Media"). But they also raise plenty of privacy issues about how to protect these valuable connections from prying eyes or exploitation by crafty marketers and unethical associates.

GOLDILOCKS' DILEMMA. For example, as a journalist, I talk to a lot of high-placed executives. Will someone be able to use my name to contact a CEO when applying for a job just because he's a friend of a friend of a friend? If I connect to my book club through Google's Orkut, will it sell all of our names to (AMZN)?

Indeed, social-networking sites find themselves in a Goldilocks-style dilemma: If they share too much information, the services become a spammers' paradise. Share too little, and they defeat the power of social networking, where you can discover and communicate with people you may not know but with whom you share something in common. The amount of information shared has to be just right.

Each startup has its own plan for how to deal with privacy concerns. Plaxo, a company that enables users to automatically update their Microsoft Outlook (MSFT) address books, aims to protect customers' information through one of the most stringent privacy policies I've seen: Contact information belongs to the individual. And if the company should ever be sold, its privacy policy -- a contract with its paying customers and their respective contacts -- still stands.

SAFE AT HOME? At, a site that aims to revolutionize the classified-ads business by linking people with similar interests, users can only see detailed information on those within three degrees of separation. A yachting aficionado from half-way round the world may know that you also share his passion, but he will be unable to contact you or any of your friends at a personal e-mail address. His message is forwarded to a designated account within the system.

WiredReach, a Dallas startup, is trying a different approach. Its system uses peer-to-peer technology to keep users' data safe -- right on their own hard drive. Founder and CEO Ash Maurya says the danger in social networking is uploading such personal information to a centralized server that's "just one hack away" from being exposed. Peer-to-peer technology has no central server. Two users who know each other can search each other's hard drives for, say, a recruiter at IBM or a senior writer at BusinessWeek. If they find a match, they request an introduction. Says Maurya: "We're trying to simulate real-world networking without losing any confidentiality."

Social-networking companies aren't just paying lip service to privacy. They know that striking a balance is the difference between success and failure. Witness Google's recent turnaround on Orkut's privacy policy. When the service launched on Jan. 22, the policy warned visitors that "by submitting, posting or displaying any materials on or through the service, you automatically grant to us a worldwide, non-exclusive, sublicenseable, transferable, royalty-free, perpetual, irrevocable right to copy, distribute, create derivative works of, publicly perform and display such Materials."

"AN INTELLIGENT ORDER." Ouch! Privacy hawks sounded the alarm. Some even warned that the notice was eerily similar to that of Microsoft's computing platform. Was Google the new evil empire, they wondered? Within a week, Orkut's policy had been rewritten. It now states that Orkut "may share both personally identifiable information about you and aggregate usage information that we collect with Google Inc.... We will never rent, sell, or share your personal information with any third party for marketing purposes without your express permission."

Indeed, many social-networking firms are not only concerned about privacy but fired up to solve today's digital dilemmas. CEO Mark Pincus argues that social networking isn't the problem but the solution to privacy issues that have, until now, plagued the Internet age: "Social networking has the potential to create an intelligent order in the current chaos by letting you manage how public you make yourself and why and who can contact you."

Let's hope so. In the meantime, social-networking sites will continue to search for the most efficient way to make people more visible and more connected to people they know without exposing them to unwanted solicitations and information. The balance between sharing and protecting personal data will be key to their success. In the marketplace for social networking -- at least for now -- privacy rules. Black covers privacy issues for BusinessWeek Online in her twice-monthly Privacy Matters column

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