Facebook has engaged in unfair and deceptive practices, according to the Federal Trade Commission. In a broad consent order Tuesday, the commission announced that Facebook deceived consumers by telling them they could keep their information on the social-networking site private, and then repeatedly allowing it to be shared publicly.
The settlement of the FTC's eight-count complaint requires Facebook to take several steps to make sure it lives up to its promises in the future, including giving consumers clear and prominent notice and getting express consent before information is shared beyond the established privacy settings.
"Facebook is obligated to keep the promises about privacy that it makes to its hundreds of millions of users," said Jon Leibowitz, chairman of the FTC. "Facebook's innovation does not have to come at the expense of consumer privacy. The FTC action will ensure it will not."
Zuckerberg's Privacy Spiel
In response, Facebook CEO Mark Zuckerberg wrote a lengthy blog post, announcing the appointments of new privacy officers and assuring he is committed to consumer privacy. He argued that Facebook is the leader when it comes to offering people control over the information they share online.
But some aren't buying the spiel.
"Gee, Facebook users should feel much better now. In its settlement of an eight-count complaint, Facebook admitted it broke past promises of privacy to its users, but now it 'promises' not to do this in the future," said Maureen Martin, a senior fellow for legal affairs at the Heartland Institute.
"The personal information people post on Facebook continues to leave me in shock and awe -- mostly shock. Facebook posters should use one simple test: Would I be upset if the posted information appeared on the front page of my local newspaper or went viral on the Internet? If the answer is 'yes,' then don't post. Period."
A 20-Year Payoff
The FTC will be paying close attention. Within 180 days, and every two years after that for the next 20 years, Facebook is required to have independent, third-party audits certifying that it has a privacy program in place that meets or exceeds the requirements of the FTC order, and to ensure that the privacy of consumers' information is protected.
"Facebook becomes the third high-profile Internet firm after Google and Twitter to agree to years of biannual privacy audits," said Greg Sterling, principal analyst at Sterling Market Intelligence.
"The FTC has also imposed an opt-in requirement on Facebook, requiring it to obtain prior consent before taking steps that impact user privacy or privacy settings. This could impinge on Facebook's product development at the margins, though I don't think it will have a major adverse impact."
Facebook's FTC settlement fits into the larger online privacy issue. Sterling points to a series of setbacks and adverse reactions over the past few years, culminating in the FTC settlement, which have forced Facebook to adopt a new attitude toward privacy. Google+ has also put some privacy pressure on Facebook.
"Independently, too, the company has matured and is much more sensitive to privacy issues than it was," Sterling said. "In Europe, Facebook faces investigations and even more sweeping potential regulation around privacy that may impact its advertising model in direct ways. But that still remains to be seen. The larger point is that far from being dead, privacy is being vindicated on multiple fronts."