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The Pushing, Pulling, Dragging and Shoving Over Facebook Privacy

The Pushing, Pulling, Dragging and Shoving Over Facebook Privacy

Facebook didn't ignore the recent member outcry over its often confusing policies on privacy settings and its handling of user information. However, the solutions the network came up with this week were far from adequate, according to several privacy groups. Meanwhile, Apple out-valued Microsoft, the DoJ sorted out iTunes allegations, and Twitter ousted third-party ads.

By Paul Hartsock
05/29/10 5:00 AM PT

Contrition is not something you normally see from Facebook. What are they going to do, say sorry for trying to squeeze a profit out of all that data everyone's willfully throwing at them?

Sure, they have their fun over at Facebook HQ. Everyone gets naptime, there's a kegerator next to every computer, and most clothing is optional -- that's to promote openness. But running the site does take a fair amount of work and work costs money, and is it really all that painful or shocking to see an ad for Skippy pop up 30 seconds after you finish uploading a dozen photos of yourself that involve peanut butter in non-sandwich-related contexts? You call it creepy; they call it relevant -- and they call it revenue, which is the only thing keeping this little playground that everyone wants to screw around in from becoming this decade's Geocities.

Did anyone ever force you to make a profile? If not, then Facebook is not about to apologize to you.

So in the essay that CEO Mark Zuckerberg wrote for the Washington Post last weekend, you won't find the words "sorry" or "apologize." Instead, his company, quote, "missed the mark." It's like when you park your car all askew from the lines in the lot. You don't tearfully beg forgiveness, you just back out and try again.

It appeared that changes were on the way. To some of the privacy advocates who'd been recently complaining about the steady degradation of privacy on Facebook over the last few years -- capped off by Open Graph -- this was an encouraging sign. Said Leslie Harris of the Center for Democracy and Technology, quote, "I am pleased at the tone, and his comments represent a change in how Facebook has responded to the concerns of its users."

There was also some skepticism. Facebook has developed a reputation: It pushes users the way it wants them to go until the screaming and crying reach a nice sharp roar, then it backs off just a little bit and considers the problem solved. Marc Rotenberg at EPIC said, quote, "The problem is, we have gone through this before -- what Mark said this morning is similar to what he said a year ago."

On Wednesday, Facebook had a press conference to specify what those changes will be. They'll concentrate on three areas: One was a promise for more powerful controls, another was an easy control to turn off all applications, which focuses on one of the biggest gripes privacy groups have -- the fact that Facebook's third-party app providers get to know a lot about you and your friends.

Another area of focus will be a single control for members' content, which will simplify that labyrinth you have to click through to make your privacy adjustments. The way it's worked until now, this runaround has been a bit of an "evil interface" -- one intentionally designed to be difficult to use so that more members just leave it alone out of frustration. A lot of the defaults are set to share as much as possible, because Facebook insists you ought to want it that way.

When Zuckerberg talks about it, he makes it sound like Facebook's tendency to err on the side of share is a sorta Zenny socio-philosophical Taoism -- one that just so happens to fit right in with his company's market strategy. The more sharing and social circulation going on in the network, the more ads they can spike the punch with, and the less likely you are to leave the party just because the host does something crass like inviting a lot of annoying guests or insisting on leaving the bathroom doors open at all times, because, you know, openness.

Finally, Facebook added that they really don't want to do any more takesy-backsies. Said Zuckerberg, quote, "If you find these changes helpful, then we plan to keep this privacy framework for a long time." That could cut both ways. You won't have to worry about Facebook pulling yet another privacy switcheroo for a while, but if you still don't like what they've done here, perhaps it's time to check out Diaspora, or maybe even give MySpace another chance. Just kidding. The site is joindiaspora.com.

Were privacy advocates impressed with Facebook's new look? Not a chance. Members of groups like EPIC, Consumer Watchdog, the Bill of Rights Defense Committee, the Center for Democracy and Technology and others held a conference call to share their thoughts, and nobody seemed all that impressed.

Joe W. Pitts III of the Bill of Rights Defense Committee said the changes were procedural, not substantive, and they just match up with Zuckerberg's familiar position of sharing information by default. John M. Simpson at Consumer Watchdog said, quote, "If Facebook were sincere about privacy, the default mode for privacy would be minimal information about everything."

He went on say that there's now zero reason to trust Facebook based on this behavior. Quote, "The whole process shows something of the Silicon Valley mindset that Facebook and Google follow -- you push the envelope as far as you can, grab as much data as you can, and then, when there's pushback, you do something else."

So where do we go from here? These privacy groups have been yelling at Facebook for years. The site's finally said, "OK, here are some changes but this is really it and we don't want to go through this again," so it's apparently not going to budge anymore based on yelling alone. Losing users would certainly change its mind, but that's definitely not where the trend is heading. So these groups are turning to government intervention. Some of them have already filed a complaint to the FTC, and they hope that by this fall, the commission will outline what the governing policy should be on collecting consumer data, especially on social networks.


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No Third-Party Ads, Please, We're Twitter

Twitter used to be so care-free before it had to fend for itself and start bringing in some kind of revenue stream. They used to have these huge parties where any developer could just show up and they'd be passing around these big bowls full of pure APIs. Anyone could just grab a programming interface and go to town on it, make their own Twitter app, and even serve up their own third-party advertising -- no need to give Twitter a taste.

But those days are over. First Twitter went ahead with its own advertising system called "Promoted Tweets," and now it's banned third parties from using its APIs to create programs that drop in ads. The only ads Twitter wants in your tweet feeds are the ones it drops there itself.

Twitter characterized the action as a move for quality control. COO Dick Costolo said third-party ad networks are, quote, "not necessarily looking to preserve the unique user experience Twitter has created. They may optimize for either market share or short-term revenue at the expense of the long-term health of the Twitter platform."

This could up the value proposition of the Promoted Tweets program, and from a user's standpoint, it may make tweeting go down a little smoother. It's rare to meet someone who actually enjoys having ads thrown at them, even when some effort is made to make them relevant.

But this move also pulls the rug out from under any company that built part of its business around Twitter and drew revenue from third-party advertising. Some of them argue their way of Twitter advertising is more effective than Twitter's own in-house approach. One such firm is TweetUp, and its COO Jon Kraft told us, quote, "This policy limits the market and limits consumer choice. That's a net negative for the Twitter community."

The Way of the Wal-Mart

If you happened to buy an iPhone 3GS last week, here are two reasons to kick yourself: A) Apple really probably, almost definitely, nearly assuredly will launch a whole new model in a few weeks, and B) you probably overpaid. Wal-Mart is now selling the 16-gig model 3GS for 97 bucks, less than half the price it normally goes for elsewhere.

So now Apple's flagship phone has joined the pricehunter club -- get a great deal if you go to this store, overpay if you don't shop around enough. It doesn't really put the iPhone in A-list company. This is not normally Apple's style -- not for its top models. Until a fourth-gen iPhone hits the shelves, it leaves the line in a very uncanny pricing valley.

The deal could attract a lot of buyers whose attitudes toward the next iPhone could be described as impatient, uninformed, or just plain indifferent. Rob Walch at Today in iPhone said this price dip could indeed hurt the next iPhone's sales, but probably not enough to leave a mark.

There's also a chance that this could do to the iPhone what lowering prices did to the Motorola Razr -- tarnish the brand and leave it looking just one step up from disposable. But that happened to the Razr because it wasn't quickly followed up with a new-and-improved alternative that carried on the brand and sold at a premium price. The Razr was left to rust, but the iPhone -- we think -- will get sharpened up in less than two weeks, the 3GS will go to second-banana status, and balance will be restored to the universe.

If Apple plays things right, nobody will care about this once WWDC rolls around, but that's a big if. It's facing tougher competition now, and that iPhone leak in April may have managed to drain a lot of juice from Steve Jobs' big reveal. Azita Arvani of the Arvani Group told us, quote, "This WWDC conference is different than the previous ones. The iPhone is in a different world now, going against a formidable competitor that had higher U.S. sales numbers in Q1. At the WWDC conference, Steve Jobs must show how the new iPhone goes beyond what Android can offer in terms of technology, form factor and user experience."

The DoJ Song'N'Dance

Just as Apple was preparing for its big WWDC party, it got some bad news courtesy of a story in The New York Times. The DoJ is reportedly chewing on whether to stick Apple with a probe for allegedly bullying record companies out of deals with Amazon's online music store.

The allegations themselves were first made public in Billboard magazine. As the story goes, Amazon last year had this idea called the "Daily Deal" -- if they could get record companies to agree to it, Amazon would get exclusive access to certain albums one day before their official release.

Apple didn't want to see any of that happening, so it supposedly threatened to withdraw iTunes' marketing support for albums that went along with the Amazon deal. In a few cases, it apparently went through with it.

iTunes is far and away the dominant online music store, so it's conceivable that it threw its weight around too much in this case. It's sort of like a gorilla sharing a cage with a few dozen Pekingese. Or the DoJ may decide there's really nothing to see here.

Feather in the Market Cap

Apple may not have quite as many employees as Microsoft, and the Mac's market share certainly isn't anywhere near that of Windows-based PCs. But in terms of market cap, Cupertino just recently edged out Redmond by a margin of about $3 billion -- that's about $222 billion vs. about $219 billion. That makes Apple the most valuable tech company in the world, and the second most valuable company in America, right underneath Exxon.

It's been quite a climb -- when the company started out, it was positioned as the anti-behemoth, a refreshing alternative to technology mega-corporations like IBM. That worked out for a while, but by the mid- to late '90s, the company was in a vegetative state, and it was reasonable to think that any day they might decide to pull the plug and sell out.

Then came a long success streak that's still going on: Steve Jobs came back, OS X launched, the iPod caught on, iTunes made its mark, the iPhone came around, and now the iPad looks to be doing well also, along with the gazillions of apps devs have made for those devices. So now it looks like Apple is the behemoth, and it's been taking a fair amount of criticism lately for how it's handling its most interesting and lively platform, the iPhone OS.

Microsoft also bears some responsibility for Apple's new position. Though Windows is still dominant, Mac OS X has made major gains over the last few years. And in mobile, it's going to be a few months still before the market sees any devices running real WinPho 7, the OS that's supposed to make Microsoft-minded phones more competitive on a consumer level with iPhone and Android.

According to Altimeter Group's Michael Gartenberg, it's not a foundational problem at Microsoft; it's more of a vision thing.

They can reach consumers through Windows in the office and Xbox in the living room, he pointed out. They have an established phone line, and services for music and video. The pieces are there, he said, but, quote, "what they don't seem to have is a clear vision for how all those pieces come together." But he added that things happen fast in technology, and it's completely possible that Microsoft will reclaim its top spot soon.

Not Exactly the North Pole

That whole bit about Santa and the North Pole and the elf toy builders is all a lie -- that's something most of us learn fairly early in life. But even after we know the truth, it's pretty easy to not give any thought at all to where our playthings actually do come from. If you're into electronics -- computers, video games, smartphones, etc. -- then chances are very high that your gadgets are made in Chinese manufacturing facilities.

These are massive factories that employ hundreds of thousands of people, and the unemployed literally form lines for interviews when it's hiring time. But the lives of a lot of these Chinese factory workers are very different from those of their Western counterparts. The hours are generally longer, the pay is much less, and it's very common to live in on-site dormitories, so your life literally revolves around the factory, 24/7.

I guess there's an argument to be made about different cultures and different values, but when one factory in particular starts seeing a rash of suicides, then something's just plain wrong. That's what's apparently happening at Foxconn's Shenzhen facility, a mega-factory that makes products for companies like Dell, HP and Apple. About a dozen suicides, along with a couple of failed attempts, have reportedly taken place there this year alone.

HP and Dell told us they're investigating the reports; Apple didn't respond to requests for comment.

Foxconn has actually been a frequent target of labor activists in the past -- they say it's little more than an electronics sweatshop, and the added pressure of building huge numbers of devices for super-secretive Apple is sometimes too much to bear. Last year, for example, it was reported that one worker killed himself after being aggressively interrogated by Foxconn officials regarding a missing iPhone.

In response to the attention these latest suicides have drawn to his company, Foxconn Chairman Terry Gou opened the factory to reporters and stated, quote, "We're a company -- we are not a society. We have a company's abilities to do things, but we don't have a society's abilities."

It is debatable whether this many suicides among a population this size could be called a "rash" at all, statistically speaking. Infectious Greed blogger Paul Kedrosky pointed to WHO data indicating the overall suicide rate for China in general is about 13 men and 15 women per 100,000 every year. If Foxconn's factory employs 300,000 people, then so far this number of suicides is actually lower than the national average.

Still, nobody wants to be associated with a factory that depresses workers to the point of jumping off buildings, and the negative attention is something these companies would rather avoid. Pund-IT's Charles King told us, quote, "I think the rapidity with which we're seeing the vendors try to address these points is an indication of how potentially damaging negative publicity around worker conditions and health can be for vendors. If they're going to be relying on second and third parties to create and manufacture their products, they really need to stay on top of what's going on at those facilities."


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