Facebook Privacy Policies Draw Flack From Washington

Facebook Inc., the world’s most popular social-networking site, has attracted millions of users with new ways of staying in touch. At the same time, the service continually tests their tolerance for sacrificing privacy.

Now it has provoked a fresh skirmish -- this time with members of the U.S. Congress. Yesterday, aides to Senator Charles Schumer, a New York Democrat, met in Washington with Elliot Schrage, Facebook’s public relations and policy chief, to discuss concerns about the company’s privacy policies. Schumer has had talks with colleagues about holding congressional hearings, according to a person familiar with the proceedings.

Senator Mark Begich, a Democrat from Alaska, said he’s worried about new data-gathering capabilities Facebook has introduced and what he sees as the company’s arrogance in brushing off questions about its practices. The site has launched a feature that builds restaurant guides and music playlists derived from personal information supplied by users and their Facebook friends.

Facebook, based in Palo Alto, California, plans to hold a meeting with employees at 4 p.m. local time to discuss privacy issues, according to a person familiar with the decision. Facebook routinely holds staff meetings on a variety of topics.

Begich, Schumer and two Democrat colleagues -- Al Franken of Minnesota and Michael Bennet of Colorado -- wrote a letter dated Apr. 27 to Facebook Chief Executive Officer Mark Zuckerberg, taking him to task over how this commercially valuable information is being shared with other websites and marketers, sometimes without users’ consent.

‘Elevate This’

In early May, Begich sent aides to meet with Facebook in Washington. So far, Begich said, nothing has changed. Facebook’s inaction “tells me that we need to elevate this so they understand how important it is,” he said.

Since its start in 2004, Facebook has amassed one of the world’s richest stores of facts and figures related to consumer behavior. The status updates, product-related musings, friendship connections and entertainment preferences shared by more than 400 million people worldwide make the site attractive to marketers and Web publishers.

“People are now recognizing that Facebook has an economic incentive to encourage people to be more public” about their consumer preferences, said Danah Boyd, a researcher at Microsoft Corp., which has invested in Facebook.

Opening Up

Zuckerberg, who turns 26 tomorrow, started Facebook as a Harvard University undergraduate. Users are increasingly willing to put out more of their information online, he says.

“People have gotten comfortable not only sharing more information and different kinds but more openly and with more people,” Zuckerberg said at an industry event in San Francisco in January.

Even so, earlier privacy complaints have sparked changes at Facebook, such as the closure of its Beacon feature.

The company started Beacon in 2007, offering a way to broadcast user activity within the network and tracking what Facebookers did elsewhere on the Web. Beacon did all of this without asking users’ permission. Facebook patrons protested and Zuckerberg publicly apologized. In September 2009, the company shut Beacon down.

“We learned from Beacon that there’s always a challenge of innovating faster than your users understand or accept,” said Facebook’s Schrage.

‘Like’ Feature

New features bear similarities to Beacon. In addition to the playlist-and-restaurant-guide technology, Facebook now lets ESPN, Levi Strauss & Co. or anyone else install a “like” button on their website.

Facebook users who visit one of these properties and click “like” may unknowingly identify themselves as fans of a certain brand, letting that company access their personal information. In theory, the sites could then sell that data to advertisers targeting Facebook users. Schrage said no partner currently does so.

If users don’t want their information to be shared, they have to sift through their Facebook account settings and click a series of boxes. “Every one of these incidents begins with Facebook sliding the privacy settings” to make disclosure of information easier, said Eben Moglen, a law professor at Columbia.

In their Apr. 27 letter, the four senators urged Zuckerberg to reverse some of the most recent changes to Facebook.

“Users should have to choose to share their information, not the other way around,” they wrote. The following week, 15 consumer groups filed a complaint with the Federal Trade Commission. Yesterday, officials from 30 European countries wrote a letter to Facebook, saying it was “unacceptable” for the company to have “fundamentally changed” the site’s default settings.

Facebook’s Schrage said the most recent changes are all entirely proper. He attributes the backlash to a public- relations failure.

“We need to do a better job of communicating to all of our users -- whether they are senators in Washington or regular people.”

To contact the reporters on this story: Douglas MacMillan at douglas_macmillan@businessweek.com

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