Facebook May Revamp Beacon
In the wake of mounting criticism, Facebook executives are discussing changes to a controversial advertising tool that publicizes users' Web activities outside of the popular social network. Alterations to the recently introduced Beacon system could be announced as early as Nov. 29, BusinessWeek.com has learned.
Executives of the three-year-old company were in deep talks over proposed changes late into the afternoon on Nov. 28, according to a person familiar with the matter. At issue is the Beacon program, which alerts members' Facebook "friends" to purchases and other activities on third-party Web sites. A spokesperson for the company declined to discuss changes, reiterating an earlier statement: "Facebook is listening to feedback from its users and committed to evolving Beacon."
Too much disclosure
Critics say Beacon constitutes an invasion of privacy. They've clamored for the reversal of a feature that requires users to opt out of inclusion each time Facebook wants to send information and demanded that Facebook switch to an opt-in policy. A move to scale back Beacon may appease at least some of the more than 45,000 people who have signed a petition, begun Nov. 20 by public policy group MoveOn.org, that urged Facebook to turn off the system unless users explicitly say they want to share their actions. "It should have been an opt-in program to start out with," says Matt Flaschen, a Georgia Tech sophomore and Facebook member who signed MoveOn's petition. "If I want to go to a movie, why does everyone on my Facebook need to know about that?" Privacy groups, such as the Electronic Privacy Information Center, are planning to file a complaint about the system with the Federal Trade Commission.
Even as Facebook mollifies disgruntled users, it risks rankling some of the partners that signed on in hopes of benefiting as members broadcast their purchases—say, from Blockbuster (BBI) or eBay (EBAY)—to a circle of friends. As part of the Beacon arrangement, partners pay for what Facebook CEO and founder Mark Zuckerberg has called "trusted referrals." The idea is that Facebook users will be more apt to patronize the sites and stores their friends are using. On Nov. 6, when he announced the system, Zuckerberg called trusted referrals the "holy grail" of advertising (BusinessWeek.com, 11/07/07).
"I Feel Duped"
Many users considered it more of an unholy alliance. One member complained of a spoiled Christmas after Facebook broadcast the person's purchases on Overstock.com (OSTK), a partner site. Other users said they were creeped out after friends learned of actions they never realized were forwarded to their Facebook lists.
Several people complained they weren't given the option not to share information publicly, or that pop-up notices on partner sites were too subtle to notice. Kim Garvey, a 21-year-old junior at Chicago's DePaul University, says she found out about Beacon after friends were alerted to a restaurant review she posted on Yelp. "I didn't see the little thing that popped up, and I didn't mean to tell everyone," Garvey says."For me, that was sort of uncomfortable." She adds that she was surprised Facebook "is willing to invade people's privacy."
On Nov. 29, Facebook said it's taking those concerns on board. "Your feedback has made it clear that Beacon can be kind of confusing," Paul Janzer, a member of Facebook's customer support team, wrote in a post to the MoveOn Facebook protest group site.
Janzer added that Facebook plans to make the sites that work with Beacon more visible and provide more information about how Beacon works. "We're sorry if we spoiled some of your holiday gift-giving plans."
The promise follows a Nov. 27 tweak to the system designed to ensure that users were clearly notified, both on Facebook and on partner sites, that news of an off-Facebook activity would be sent to friends, unless the member explicitly declined to send that information. Those earlier assurances did little, however, to appease upset users, many of whom don't want Facebook to share information on their Web activity for advertising purposes—even if it's shared with people they’ve identified as friends. "I feel duped," says Frank Kruller, a Facebook member for seven months. "If I wanted to share something with my friends I'm pretty sure I could tell them myself."
Any move that weakens Beacon's appeal to advertisers leaves Facebook under pressure to find other ways to lure marketers and justify the lofty $15 billion valuation bestowed by Microsoft (MSFT) in October, when it purchased a 1.6% stake for $240 million (BusinessWeek.com, 10/25/07). Users of social networks are typically less responsive to standard ad formats, such as the posterlike banner ads commonly seen on the Web, than to newer, more interactive or personalized advertisements. Some marketers say that when they place banner ads on Facebook, the so-called click-through rate, a measure of user responsiveness, is one-fifth the rate for the larger Web.
But many Facebook users insist that they, not marketers, should set the terms of how, and how much of, their information is shared for advertising purposes. Some threatened to move to other social networks or start their own blogs if Facebook takes that decision out of their hands. "I will set up my own blog," says Flaschen. "It is a little less convenient, but if [Facebook] can't understand the privacy implications of what they are doing then it's not worth it."
Adam Green, a spokesman for MoveOn, hopes other social networks that have their own Facebook-like feeds about users' actions—namely, News Corp.'s (NWS) MySpace—take heed of such warnings. "We hope that this is opening a lot of people's eyes to the very real privacy concerns on the Internet," says Green. "The privacy interests of Internet users should get put before the wish list of corporate advertisers."