By Xavier Forneris
In a previous post (“Valuation of Internet Business”) I reported on the recent settlement between Facebook and the U.S. Federal Trade Commission (FTC). The FTC found that privacy claims made by Facebook were “unfair and deceptive, and violated federal law”. The social media would have shared users’ private data with advertisers in spite of a clear commitment not to do so. Another broken promise pertained to the access to videos and photos on deactivated accounts.
Let’s be clear: with this settlement Facebook is not admitting that it has violated the law. The company recognized, in a blog post by CEO Mark Zuckerberg, that “a small number of high-profile mistakes” were made but that it should not overshadown Facebook’s good record on privacy. And it has appointed two “chief privacy officers”. As part of the FTC settlement, Facebook has clear obligations. For instance it has to obtain users’ approval before it changes the way it shares the data. It will also be subject to an independent privacy audit, every 2 years for the next 20 years…Pretty embarrassing, although The Economist makes clear that Facebook is not the only company facing these measures: the FTC has also made Google and Twitter agree to regular independent audits, following accusations of privacy violations.
The Economist thinks that the regulator’s purpose may be to develop a regulatory framework that is stricter but still allows social media to innovate. It also warns that US Congress may be prompted to legislate on this and that European regulators are also looking into the privacy practices of social media.
Source/To read more: The Economist, Dec. 3, 2011