Facebook's Overblown Privacy Problems - Forbes.com

Mark Zuckerberg wants Facebook users to know that he cares about their privacy. In fact, he may care far more than the users themselves.

In a blog post, the 23-year-old founder of the social networking site apologized Wednesday for privacy violations by its controversial Beacon advertising program, which broadcasts users' online purchases to friends in their networks. Zuckerberg announced that Facebook will add a Beacon opt-out button to the site's privacy settings, caving to the demands of a protest group created by MoveOn.org called "Petition: Facebook, stop invading my privacy!"

"We simply did a bad job with this release, and I apologize for it," Zuckerberg wrote. "While I am disappointed with our mistakes, we appreciate all the feedback we have received from our users."

But just how many of the site's users had actually demanded Zuckerberg's bowing and scraping? Though MoveOn's privacy protest group has been gaining about 10,000 users per day, Forrester Research analyst Jeremiah Owyang points out that the group's 70,000 members still represent less than 0.2% of the site's 50 million users.

That means that despite the grand gestures, Beacon isn't going away. Aside from a vocal minority, Owyang says, most members will hardly notice the new opt-out function. "A majority of users don't know what Beacon is, nor do they care. So a majority won't turn it off," he says.

Since the new advertising program was announced earlier this month, the number of Facebookers visiting the site's privacy settings page has risen by less than 100,000 users a week, according to Web traffic analysis firm Compete. By comparison, weekly visitors to the privacy settings page jumped by 600,000 users per week immediately following Facebook's October announcement that user profiles would be open to public search engines.

All of that means Facebook users are already in the habit of sharing or concealing their personal details and activities with other users on the site by default, and only opting out of the sharing functions for certain actions they want to keep private, says David McClure, an adviser to start-ups and guest lecturer at Stanford who teaches a class on Facebook. So Beacon's opt-out for broadcasting of purchases represents only a minor shift in the community's tell-all mindset.

"Most people on Facebook are used to this opt-out lifestyle transparency," says McClure. "When they don't want to share, they opt out in a case-by-case basis. The default is that their life is transparent."

So why is Zuckerberg backpedaling? McClure argues that the contrite message was more about appeasing vocal news outlets and advertisers than responding to users' wishes. In the wake of a media dog pile on the Beacon controversy, Coca-Cola, Travelocity and Overstock.com have all suspended advertising on Facebook. "Whether the site's users care about privacy or not, Facebook needs to manage PR and avoid scaring advertisers," McClure says.

Still, some privacy advocates took Zuckerberg's blog post as a victory for users' rights. In a statement, MoveOn called the change "a big step in the right direction," and Marc Rotenberg of the Electronic Privacy Information Center added that "Facebook is learning that privacy matters. It's signaling that it does care about how it's viewed and how important trust is to online businesses."

But McClure is more skeptical about whether users will use the new opt-out function. "Most people don't change the default," he says. "If the default is 'on', they'll never turn it off."