How Facebook-FTC Settlement Reflects Privacy & Analytics Challenges


The fact that Facebook found itself addressing a regulatory charge of some kind should have come as no surprise, given the brouhaha about annual changes to its user interface and profile privacy settings. Little wonder, too, that such a conflict would have widespread implications for digital marketing.

Late last month, Facebook reached an agreement with the Federal Trade Commission regarding accusations that it misled users about the privacy of data shared on the site. The company "deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public," the FTC said in its announcement of the settlement.

The settlement requires audits of Facebook privacy practices. VentureBeat has reported that this has led to a reorganization. Five product groups must report to CEO Mark Zuckerberg. This will eliminate questions about how informed leadership should be about product development.

The various reactions to the Facebook news are fascinating to watch -- and not just because of the company's place in social media and its ability to connect 800 million people to events, articles, and one another. Many people have criticized Facebook's privacy measures, but numbers suggest that its use continues unabated. Participants reportedly spend as many as 15 hours per month on the site. AllAnalytics.com community editor Shawn Hessinger captured Facebook’s relationship with privacy best in his comment, "Facebook is simply the poster child for this kind of problem today, but there is no evidence it has hurt the company's popularity or revenue."

The Facebook-FTC agreement reflects the new strategic considerations companies must make about data access and management. Social media contribute unstructured data to the analytics mix, but the act of sharing and connecting through APIs can easily change customer data from a competitive advantage to personally identifiable information that falls under government protections.

This challenges technology companies in a number of key ways. For one thing, the program and coding languages on which Websites, platforms, and applications are built must reflect a deeper consideration of product and service delivery, instead of solely specific technical purposes. Such underlying technologies foster consumer convenience, but some leave companies struggling to comply with privacy and other regulations. Search Engine Watch reported that Google is working to create an internal system for complying with a new UK privacy law on cookies -- the text files that serve as the basis for Web analytics, browser bookmarks, and a number of digital applications.

In addition, the expanded application of computer languages and data, which can start innocently enough as a way to measure traffic and assess a visitor’s digital experience, can become problematic when analytics data is combined with other information. A Carnegie Mellon University study said that personally identifiable information is being increasingly exposed as so much data is collected and synced. As a result, it is becoming "increasingly difficult to provide useful data with privacy protections."

Another challenge in this new age is how to deal with data stewardship. Do companies need to announce how they're handling data privacy? The knee-jerk response is "Yes," but in defending themselves against legal implications, companies can be forced to expose methodologies that give them a competitive advantage. Could you imagine KFC revealing its blend of herbs and spices, or Coke revealing its secret formula? These companies make legendary efforts to protect the very essence of what makes their products special.

Lawsuits always have been one tool in technological warfare to force a competitor to reveal its secrets. As more technology enters the public domain, companies will have to strike the balance between explaining how privacy is maintained and not explaining the algorithms and proprietary designs that make such maintenance possible.

Company leaders must be aware of how information is flowing within their organizations. The advent of data management, from analytics review to studying big data, signals an increasing capability of merging data sources. Such a merger can put personally identifiable information at risk. So company leaders must be vigilant about information management -- not just for strategic growth, but for corporate survival.

Pierre DeBois, Founder, Zimana

Pierre DeBois is the founder of Zimana, a small business analytics consultancy that reviews data from Web analytics and social media dashboard solutions, then provides recommendations and Web development action that improves marketing strategy and business profitability. He has conducted analysis for various small businesses and has also provided his business and engineering acumen at various corporations such as Ford Motor Co. He writes analytics articles for AllBusiness.com and Pitney Bowes Smart Essentials and contributes business book reviews for Small Business Trends. Pierre looks forward to providing All Analytics readers tips and insights tailored to small businesses as well as new insights from Web analytics practitioners around the world.

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Re: Poster-child for what not to do
  • 1/9/2012 4:43:48 AM
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Kicheko: I think its a very good suggestion because then you cannot blame anyone because its just an option. I think FB should consider this feature.

Re: Poster-child for what not to do
  • 1/9/2012 4:40:02 AM
NO RATINGS

Yes true Joe but dont you think that the ones who start early are the ones who will continue to do so. Yes they willl make mistakes since they lack experiance but in the end by making mistakes only you learn.

Re: Poster-child for what not to do
  • 1/4/2012 7:17:27 AM
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Seth, you are right, though I think what aggrevates that perspective is the number of changes. I have seen a few books on Facebook become outdated quickly because their publication was too out of sync from significant changes. I am not assigning blame, more of an observation that too many changes on a product that is beloved can damage branding to a degree.

I also think it's a byproduct of application developers - consumer do not expect rapid change, but that may be because they discover a product during its lifecycle. Not everyone is an early adopter, but a good marketing effort will shepard a product beyond its intial cache with early adopters.  Gaining widespread usage is a business goal, but it can damage a brand if not managed to serve the hard core "fans" that supported the product at the beginning.

Re: Poster-child for what not to do
  • 1/2/2012 4:41:37 PM
NO RATINGS

I think one issue with Facebook, is that while it does have the ability to catergorize friends and select who can see which posts, it is not readily obvious how to do it. The how to needs to be more clear and upfront. 

Re: Privacy and Transparency
  • 1/2/2012 4:39:24 PM
NO RATINGS

It's always important to search for one self on the internet.  I was shocked one time that I searched for myself and found a list of all the products I purchased on Amazon listed.  I called Amazon and they removed it immediatley, but claimed it was a 'service' so that my 'friends' could see what stuff I purchased incase they wanted to buy something.   Needless to say, I was upset. 

Even now, there are claims that Facebook is tracking which sites you visit even when you're logged out.  Source: http://www.huffingtonpost.com/2011/09/26/facebook-logout-cookies-privacy-tracking_n_980838.html

Right now, with currently technology, could Facebook be totally private even if it wanted to?  With the ability of friends of friends to repost your messages, it seems the only person who can guarantee privacy is the consumer him or herself by not putting it out there in the first place.

Re: Poster-child for what not to do
  • 1/2/2012 3:20:06 PM
NO RATINGS

I haven't read it yet but it's on my list. Reviews are mixed since Jarvis tends to come off as abrasive (at times) on twitter and his blog. I think a chunk of the negative reviews target him personally rather than the book content. Either way I still want to read it (along with a giant list of tech business books).

Re: Poster-child for what not to do
  • 1/2/2012 11:04:46 AM
NO RATINGS

@Pierre, Yes, whoever uses FB data would have to scrub out what is not really relevant. But I imagine that what we may consider oversharing could be valuable to some -- for example if it reveals a taste for certain types of food, drinks, or even music that could be marketed to particular individuals.

Re: Poster-child for what not to do
  • 1/2/2012 5:23:55 AM

Ariella,

IMHO, it's a maturity level in the person.  The potential to overshare and cause a chain of response is what make social media fascinating and also a hindrince to some people - a flaw that can be hidden in personal circles gets magnified on a public stage. And social media is as public as it gets.

From a sentiment aspect issues that crop up because of oversharing and response can be a huge factor in how data will be processed.  Over time will have learn what can trigger worthwhile activity over weird tangent discussions.

Re: Poster-child for what not to do
  • 1/2/2012 5:14:17 AM
NO RATINGS

Hi Daniel,

Thanks for joining the discussion. Elaborate on more important and how it is irrelevant to age or gender.

Re: Poster-child for what not to do
  • 1/2/2012 5:09:28 AM
NO RATINGS

No, but I do recall seeing the book before. Have you read it or have picked up some reviews on it by chance?

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