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SAN
FRANCISCO - Facebook Inc.’s expected settlement with
the Federal Trade Commission is sending a strong message
to Internet companies that regulators are getting
serious about protecting the privacy of consumers.
The
social networking giant could announce a deal with the
FTC as early as Monday over charges that it violated
users’ privacy when it changed default settings to
make more of their information public.
The
settlement taps into growing public concern over online
privacy and signals more aggressive enforcement from
regulators.
And it
appears the message is coming through loud and clear in
the corner offices of Silicon Valley and beyond —
especially as Internet companies prepare for potentially
lucrative initial public offerings.
“Privacy
now has the potential to affect the bottom line, which
has gotten the attention of CEOs,” said Lisa Sotto,
head of the global privacy and information practice at
the law firm of Hunton&Williams.
For years
online privacy was a sleepy issue hashed out by
anonymous lawyers in back rooms. But the explosion of
Web usage — and the speed and volume with which data
can be transmitted around the globe — has moved the
public debate over online privacy to the forefront.
Lawmakers
and regulators have responded with pledges to address
how Internet companies collect personal information and
what they do with it.
The FTC
has called for a “do not track” system to make it
easier for Internet surfers to keep companies from
snooping on their Web activities. The Obama
administration has asked for an online privacy bill of
rights, while Congress has introduced more than a dozen
privacy bills so far this year.
In the
cross hairs is Facebook, the wildly popular social
network with more than 800 million users that is
preparing for a possible IPO that could value the
company at up to $100 billion.
Changes
to its privacy policies over the years led to a flood of
complaints from consumers concerned over how Facebook
handles their personal information. Facebook is also
under scrutiny in the European Union for possible
breaches of personal data.
“Facebook
has to expand its data collection practices to satisfy
its largest advertisers to boost the IPO share price.
But it also has to appease privacy regulators in the
U.S. and the European Union, whose actions could derail
Facebook’s pending financial bonanza,” said Jeffrey
Chester, executive director of the Center for Digital
Democracy, one of the consumer groups that complained to
the FTC. “It appears Facebook is poised to neutralize
any threats to its future coming from U.S.
regulators.”
The
proposed settlement with the FTC would prohibit Facebook
from making public information that a user originally
shared privately without his or her explicit permission.
It does not require Facebook to get consent from its
users on new sharing features. As part of the
settlement, Facebook would have to agree to 20 years of
privacy audits.
Spokesmen
for the FTC and Facebook declined to comment Friday.
The
settlement stems from a complaint filed by the
Electronic Privacy Information Center in December 2009,
which asked the FTC to investigate whether consumers
were harmed when Facebook changed its privacy settings
to disclose more personal information without first
getting their permission.
“Users
know what information they want to be public and what
information they want to be private,” said Marc
Rotenberg, executive director of the Washington advocacy
group. “It should be the users’ choice, not
Facebook’s choice.”
Frannie
Ucciferri, a 19-year-old sophomore at the University of
California, Berkeley, said the FTC should crack down on
Facebook for misleading consumers.
But, she
said, “people need to understand that the Internet is
not private. As soon as you post something online, you
are making it public.”
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BEGIN OPTIONAL TRIM)
In 2009
when David Vladeck took over as the head of the Bureau
of Consumer Protection at the Federal Trade Commission,
he criticized privacy policies as useless and dubbed
some online tracking as Orwellian. The FTC has signaled
recently that it plans to step up enforcement.
The FTC
in March reached a settlement with Google. The Internet
search giant agreed to 20 years of privacy audits after
a probe into deceptive practices of its social
networking service Buzz. Twitter also agreed to privacy
audits after hackers broke into Twitter accounts,
including one belonging to President Barack Obama.
“The
FTC never stopped looking at privacy, but now we are
seeing the FTC take enforcement to a new level,” said
Sotto of Hunton&Williams.
Facebook
has made changes that it says give users more control
over how public or private their personal information is
on the site.
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OPTIONAL TRIM)
Facebook’s
Chief Executive Mark Zuckerberg said in an interview
with PBS’s Charlie Rose that he wants people to feel
like they have control over their information.
“I
think we’re going to need to keep on making it easier
and easier,” he said. “That’s our mission.”
If
that’s Facebook’s mission, it has a ways to go, said
Kerri Jablonski, a 36-year-old stay-at-home mom and
blogger in Seattle who spends hours each day on Facebook.
She’s savvy about social media, she said, but many
people are not.
“Mark
Zuckerberg may be a computer genius, but the average
computer user is not,” Jablonski said. “Facebook has
to make the private settings simpler to use.”
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