Is Facebook Incompetent, Ignorant, or Simply Arrogant?

Last Updated Oct 25, 2010 1:34 PM EDT

Harvard Business School professor Sunil Gupta asks the above question in the wake of the giant social networking company's latest flap over user privacy. According to the Wall Street Journal, FB has violated the privacy of millions of users by transmitting identifying information to advertising firms and Internet tracking companies.

"Mark Zuckerberg has repeatedly played down this issue by suggesting that people want to share their private information with the world," Gupta writes in this OpEd piece at HBS. "The reality suggests otherwise. An increasing number of Facebook users are adults over 35 who are very concerned about privacy. In addition, the majority of Facebook users now come from abroad, where privacy concerns are even more critical than in the United States."

Gupta's colleague Benjamin Edelman agrees that a customer backlash may be brewing. Edelman says his own research on Facebook has yielded a pattern of privacy abuse and unfulfilled promises to repair the damage. "Users are increasingly skeptical of Facebook's privacy promises. The next time Facebook says 'Trust us,' sensible users will likely say, 'No way.'

But a different take is offered up by professor Mikolaj Jan Piskorski, who has looked deep into user behaviors on FB, MySpace and other social sites. He thinks Facebook is not threatened by the latest privacy issue, and even says that social network users "could care less about what company knows their Facebook user ID or their friends' names." Users are much more concerned about privacy restrictions around the photos they upload.

Facebook fans face a potentially bigger threat to their privacy: their own friends. HBS marketing professor John Deighton asks, "How upset should (Facebook users) be if their privacy is invaded? They choose to put their lives on display to their friends, with no certainty that their friends will respect the confidentiality of their disclosures, and in fact a fair degree of certainty that some of the disclosures will be passed along."

What do you think? At what point do Facebook's 500 million users start to abandon the platform? Is this situation ripe for some disruptive innovation by a competitor?

Here is some interesting related reading from other BNET bloggers:

(Image by Flickr user by opensourceway, CC 2.0)
  • Sean Silverthorne

    Sean Silverthorne is the editor of HBS Working Knowledge, which provides a first look at the research and ideas of Harvard Business School faculty. Working Knowledge, which won a Webby award in 2007, currently records 4 million unique visitors a year. He has been with HBS since 2001.

    Silverthorne has 28 years experience in print and online journalism. Before arriving at HBS, he was a senior editor at CNET and executive editor of ZDNET News. While at At Ziff-Davis, Silverthorne also worked on the daily technology TV show The Site, and was a senior editor at PC Week Inside, which chronicled the business of the technology industry. He has held several reporting and editing roles on a variety of newspapers, and was Investor Business Daily's first journalist based in Silicon Valley.