Facebook Is the Privacy Pirate? Sure, and I'm the Easter Bunny

Last Updated Oct 19, 2010 1:31 PM EDT

The WSJ story on how many Facebook apps transmit user personal data to advertising and consumer information companies has become the latest flare-up over the company's reputation for being cavalier with consumer privacy. My BNET colleague Ben Popper calls the attention "total bunk" because the information has already been public and "nothing Facebook did is any more reckless than what the Wall Street Journal does every day."

Although I've been a critic of Facebook over privacy, I would agree with Ben, and that's the problem. There is nothing new about privacy issues. Not just with Facebook, but the entire tumult over how tech companies handle customer data. It's not an unimportant issue. However, the industry, as it balances the desire for money from advertisers with the fear of regulation, often thinks that it's in a privileged position where these issues are concerned. It's not, and that could become a big problem for business managers.

Companies like Facebook often act -- and, I think, often sincerely feel -- like they alone grasp the potential of consumer data and are on the forefront of using it. They see the possibilities and assume they have control. But they don't. Sophisticated marketers, database companies, financial services businesses, and others have accumulated a numbing amount of information on people, all of which they can pull together for detailed profiles and predictive models that make the efforts of Internet companies look naïve in comparison.

These are companies that started consumer profiling decades ago, using mainframes and the traces we all leave behind: banking and credit card purchases, loans and mortgages and car payments, educational background, zip code neighborhood analysis, periodical subscriptions, data from warranty cards and product registrations.

In theory the Internet companies know what could be done with such information. But they often arrogantly assume that non-tech companies don't get how to do this type of work. Pass over a Facebook ID and, as Ben noted, you often can correlate it to someone's actual identity with a Google search. Then becomes another data point relating to the large information dossiers -- that's really what they are -- that traditional database marketing companies already possess. We live in a society where approximately 80 percent of people can be uniquely identified with a birth date, zip code, and gender. I suspect it would take only one or two additional data points to push that to 95 percent or better.

It's time for online companies either to stop being uninformed or to end the pretense of control. While they pass any data associated with users, or allow their business partners to share such information, they have no control. But when the marketing hits the fan, you can bet that high tech collectively will be the fall guy.

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    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.