Facebook’s IPO May Be the Last Straw for Privacy-Minded Users

Tue, Jan 31, 2012 at 4:23 pm

    Facebook has earned poor marks from privacy advocates for years, but their occasional bursts of indignation haven’t seemed to filter down to the general membership. That could be changing, though. When Facebook goes public, there will be more pressure than ever to bring in advertising dollars, and that usually means exploiting user data. That trickle of users migrating to Google+ and Twitter may soon become droves.

    Zero hour is approaching as the certainty grows that Facebook will be filing for its initial public offering this week. Zero hour for excited investors and Wall Street banks — and zero hour for privacy advocates, who see a public Facebook as a very dangerous Facebook, at least as far as privacy is concerned.

    Even as a private company, Facebook had no problem pushing the envelope, Consumer Watchdog spokesperson Carmen Balber told the E-Commerce Times. “Facebook is already treading dangerous waters as far as privacy rights

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    are concerned. The pressure to monetize consumers’ user data will be greater when there are shareholders to satisfy.”

    In general, Wall Street views consumer data — especially the rich treasure trove that exists in Facebook’s servers — as extremely valuable, she said. A case could easily be made that Facebook would be remiss in serving its shareholders if it didn’t maximize this information.

    As for the privacy agreement Facebook and the Federal Trade Commission inked last year, Balber said it wouldn’t be enough to protect consumers, especially from a public Facebook. “It was a good start but it was only that — a good start. We always viewed it as something to be expanded further.”

    Forcing Timeline on Users

    It could be that Facebook’s zeal to maximize customer data will backfire on it when it becomes a public company, Wojtek Zarzycki, chief investment officer and managing director with Toronto-based Optimal Investing, told the E-Commerce Times.

    One can already see that happening with Timeline right now, he added.

    “From an investment point of view, we see Facebook’s decision to force the new Timeline layout on their users as a negative,” Zarzycki said. “The lack of discernment by the company to launch this product upon its users, who value choice and the freedom to choose, makes us question the management’s direction as the IPO nears.”

    In general, Zarzycki said, the company is very bullish on the IPO as it comes to market. However, “this change of direction by management has raised very valid questions and doubts about the company’s ability to adapt as it becomes a public company.”

    Also, any future decisions by Facebook to monetize user data will be made public, he pointed out. “Their actions and missteps will become more vocalized as they have to answer to their shareholders.”

    The Threat of a Modest Google+

    Then there is Google (Nasdaq: GOOG) and its Google+ network lurking in the background, added Zarzycki.

    “As the proliferation of Android phones and tablets continues throughout the American market and the world, the availability of Google+ at these users’ fingertips will only accelerate the rate of increase of this social platform,” he predicted.

    “Google is listening to the complaints that users have about Facebook’s lack of privacy,” Zarzycki said, “and this latest move will make them want to widen the differentials between the two platforms. “

    Other Competitors

    As Google+ and other platforms offer a viable alternative, users will start to shun Facebook, said Mario Almonte, managing partner at Herman & Almonte PR, in large part because of its approach to privacy.

    “Much like a long-suffering wife, Facebook users have been putting up with the abuse of their confidence and trust for many years — for the simple reason that there didn’t seem to be a better place to go,” he told the E-Commerce Times. “But now those alternatives exist, with sites like Google+ offering a friendly and familiar interface, and Twitter maturing into a more acceptable and convenient form of social communication.”

    Twitter is an especially sexy alternative, noted Almonte, because of its celebrity-rich membership.

    Facebook has been surprisingly quiet about the latest firestorm over its no-opt Timeline, he observed. “Regardless of their decision — whether they back off or implement it — there are strong indications that the damage is done, and they can expect to find an empty house one day. Users can take only so much abuse before they abandon them for good.”

    Or maybe not. Google, Microsoft (Nasdaq: MSFT), and many others will have to respond to the changes Facebook makes that affect advertising, Eloqua Chief Privacy and Security Officer Dennis Dayman told the E-Commerce Times.

    “As I see this now,” he said, “maybe this is why Google changed its privacy policy to allow for easier ability to share their demographic data between their product lines.”

    Facebook did not respond to our request to comment for this story.

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