Justifying social networking paranoia

I’ve never been a fan of social networking sites. I don’t use LinkedIn, MySpace or Facebook, or other services that offer to share my information with a circle of my “online friends.” The main reason I’ve avoided these services is that I’ve always been leery of how the companies that run the services might use or otherwise fail to protect my private information. I’ve been expressing my skepticism for years, ever since I came out against Plaxo in 2004.

Since the controversy overFacebook Ads and its Beacon technology hit the fan last month, it seems my social network privacy paranoia is totally justified. Prescient, even.

In case you missed the news, Facebook was forced to do an about-face with its new automated word-of-mouth advertising service. Individual users, security experts and privacy watchdogs all complained that Facebook was surreptitiously gathering data about people who use Facebook or services from Facebook partner companies, like Blockbuster and Fandango. Users of these services had their online movements and activities tracked, logged and sometimes published without their knowledge or permission.

According to Facebook, the intention of collecting this information was to be able to present highly targeted ads to Web users and to the people in their social networks. For the past month, people have been expressing their outrage and their shock. I’m outraged, but I’m certainly not shocked. The technology to collect this usage information has been available for some time. It’s just that Facebook is the first company that has had the guts to try to use it for financial gain.

Blame it on the economics of the Web.

There’s a lot of content and an innumerable list of services provided via the Internet. Since it takes money to provide content or a service, there are basically two ways to fund what we get over the Web. One, the user pays directly for the content or service. Two, the service provider uses advertising to offset the real cost of the content or service. (Chances are you didn’t pay to read this column, so thank the advertisers who support the production of this fine publication for the “free” content.)

As users of Web-based services, we are extremely reluctant to pay for things ourselves. There’s a perception that if it’s on the Web, it should be free. We’ve gotten used to having sophisticated services like travel planning, entertainment delivery, research capabilities, comparison shopping and yes, social networking, all without cost to us.

But someone has to pay to deliver the content or services, so many Web site owners turn to advertising to support their business. Unfortunately, it’s not cheap to provide the application development, the database and storage infrastructure, and the operations labour.

The funding schemes for social networks are no different. It costs a lot of money to develop applications and provide storage space for the inane details of our lives. If Facebook can’t take in money from its users, it has to squeeze money from advertisers. And guess what? Advertisers expect bang for their bucks. Beacon was designed to provide the bang.

I’d venture to say there isn’t an advertiser in America that isn’t drooling over the prospect of getting access to the wealth of highly personal detail in an application like Facebook. Oh, to be able to pinpoint precisely the likes and dislikes of 20 million people! And to be able to use that information to target an ad to precisely the right person who might want to buy something right now! It’s the holy grail of advertising.

There’s just one catch. Just because the people who pay to help you provide a service want access to all that personal information you collect, that doesn’t make it right. Facebook crossed the line in the sand when it comes to expectations of customers’ privacy rights. The public outcry forced Facebook to reel in its advertising program, at least for the time being. The fact remains that this company is still amassing a tremendous amount of personal information, and we don’t yet have assurances of how that data will be used, now or in the future.

What’s next? Could your employer make a new business out of selling access to the data in its HR database to advertisers? Could government entities replace income or property taxes with ad revenue based on your personal information in its databases?

Facebook Ads and Beacon started us down a slippery slope, and no one knows how far it is to the bottom. As for me, I’ll maintain my paranoia and try not to feed the advertising frenzy.

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