Facebook's New Privacy Controls Could Gut Its Business
On a conference call with reporters today, Facebook CEO Mark Zuckerberg finally sounded contrite. One of his big takeaways from the recent weeks of public criticism was, "Just don't mess with the privacy stuff for a long time." The company says it's adding powerful new controls that make it easy for users to become very private. It's too soon to know how many users will choose that path, but if lots do, it will be a big blow to the company's core business.
The major announcements in terms of privacy were threefold:
- A simple three step process to change your profile between completely open and completely private
- A single box to opt out of sharing your information with all outside sites
- And a promise that whatever your privacy settings are now,, changes to the site in the future will not make you more public without your permission.
More privacy might hurt the company by shrinking the network of connections and interests Facebook harvests about its users. And that's precisely what advertisers are paying for. As Facebook VP Eliot Schrage put it, the company's long term plan to monetize rests on advertising: "Think of a magazine selling ads based on the demographics and perceived interests of its readers."The key loss will be if many users choose not to share their information with outside sites. That means Facebook won't be able to track them across the entire Web and pitch them to advertisers accordingly.
On the other hand, Facebook may have solved the problem of its PR roller coaster. The core issue has always been the tenuous balance between Facebook's desire to update the site and users' desire to have their privacy remain the same. Now Facebook is promising to separate these conflicting impulses. Users that want to can go private and stay that way. That will allow the company to focus future upgrades on the growing community of users who have a more relaxed relationship to privacy.
Today's announcement shows that even as Facebook grows, it still has to be mindful of its image. Zuckerberg said the company had not seen any meaningful number of users quitting the site, despite media reports of an exodus.
The introduction of the News Feed back in 2006 got an angry response from about 1 million of the 10 million users the site had at the time. Now that Facebook has 500 million users, the percentage who are upset is less, even if the number of angry folks is "bigger than the State of New York."
Image from Flickr user b_d_solis