Facebook Users Force Change in Site’s Privacy Policy

Info Tech & Telecom News (Heartland Institute), May 1, 2009

Facebook quickly retreated from a recent change to its privacy policy after thousands of users made online protests and threatened to leave the site.

The episode offered a vivid example of how market forces quickly create positive change in the technology industry.

Facebook—the wildly popular social networking site and one of the most-visited sites on the Web—changed its “terms of service” in February by removing the section of the policy that terminated Facebook’s right to information in an account once it was closed. The change meant all pictures, messages, status updates, contact information, and other account data would remain the property of Facebook in perpetuity.

Spurred by bloggers and Internet watchdogs, thousands of Facebook users staged a mutiny against the company, demanding a change in the policy to protect their privacy and what they considered to be their online property.

Facebook quickly folded, reverting to its old policy. The site also will allow users to vote on potentially controversial changes and establishment of a council to report on feedback.

Market Victory

“Facebook’s quick reaction to user complaints shouldn’t surprise anyone who understands how the market works, particularly on the ‘Net where consumers can easily move from one service to another,” said Sonia Arrison, a senior technology fellow for the San Francisco-based Pacific Research Institute.

“The company knows that if it doesn’t make changes in response to user outrage, it will lose clients to competing services,” Arrison said. “This is the best way to ensure good practices—getting feedback straight from the actual users.

“There are many examples of such behavior,” Arrison added, “such as when Amazon.com quickly responded to allow consumers to opt out of ‘purchase circles’—a published list of group purchasing patterns—or when Real Networks rapidly fixed its RealJukeBox software after it was revealed that there was an unknown tracking mechanism inside.

“What these examples demonstrate is how the profit motive actually protects consumer interests,” Arrison said. “Activists should note such success and stay out of the way when market forces cause companies to respond so well to their clients.”

Keeping Government at Bay

Daniel Castro, a senior analyst with the Washington DC-based Information Technology and Innovation Foundation, said he hopes government regulators paid attention to this controversy because it shows consumer reaction works faster and better than government intervention.

“The Facebook policy changes reflect the fact that pursuing a consumer-friendly privacy agenda benefits both consumers and businesses,” Castro said. “Companies that stay ahead of federal and state privacy regulations can use their corporate privacy values as a key differentiator from their competitors.

“No matter what government does, many people will want either more or less privacy protections than what is afforded to them by public policy, so most of these conflicts will ultimately be resolved in the marketplace,” Castro said.

Aricka Flowers ([email protected]) writes from Chicago.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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