When MySpace Goes, What Happens to the Data and Privacy?

Last Updated Jan 12, 2011 11:49 AM EST

MySpace (NWS) laid off almost half of its employees yesterday. Rumors of the action have been around for weeks. The prospect that News Corp could sell the company, shut it down, or sell its assets raises some thorny questions about data and privacy -- questions that have implications throughout the social networking industry.

MySpace in a death spiral

Was it design that caused even one-time major users like Tila Tequila to abandon the site because "it's not simple anymore"? Did a lack of innovation and smart management strike a mortal blow? Or did Facebook simply outmaneuver MySpace by using a clever approach to leverage college and high school student adoption into a fad? However, in an age of social networks, personal information graphs, and privacy concerns, there's a more pressing question: What happens to the data?

This may be the largest social networking service that has been in death throes. News Corp would like to sell the company. There have been no takers so far, and the continued downsizing and shrinking customer base won't make MySpace look any more desirable an acquisition. Nor will the potential for sinking morale of the remaining employees aid the situation.

Data doesn't take a holiday

And yet, MySpace still has massive user data assets. At one time, MySpace boasted of having 100 million users. At the end of November, comScore had the number pegged at 54.4 million unique users, which was 9 million fewer than the year before. Even at that rate of attrition, the number today is still in the tens of millions -- and the company presumably has all the data of previous users still tucked away in archives and backups.

Privacy critics often focus on what a company like Facebook does with personal information. But there is little attention to the collection of data as a corporate asset that another company could acquire, either through buying the social network in question or purchasing the data asset in a case of dissolution or bankruptcy. At that point, pledges to users are unlikely to restrict the buyer from doing what it wants with the information.

MySpace's privacy policy

The MySpace privacy policy leaves the company or an acquirer plenty of room to maneuver:
  • It says that if the company "materially changes its practices regarding collection of or use of your PII [personally identifiable information], your PII will continue to be governed by the Policy under which it was collected unless you have been provided notice of, and have not objected to, the change." (Emphasis added.) A simple email that most users ignored would do the trick.
  • There is no provision for MySpace to delete any information that users previously gave.
  • If users had given permission, MySpace would be able to share their data with third parties.
  • MySpace has a wide ability to share personal information with third parties, including those who provide services for the site as well as affiliated companies "if it has a business reason to do so."
  • "In addition, if Myspace [sic] sells all or part of its business or makes a sale or transfer of all or a material part of its assets or is otherwise involved in a merger or transfer of all or a material part of its business, Myspace [sic] may transfer your PII to the party or parties involved in the transaction as part of that transaction."
So MySpace can explicitly transfer user data, either through an outright sale of the company or -- to avoid any possible legal restriction on what the acquirer might do -- of the data alone. If the company should get sold, expect people to suddenly realize the privacy implications, albeit too late.

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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.