Friday, 2 December 2011

Could Privacy Laws Kill the Social Media Boom?

Facebook, Google and others have been dogged by issues surrounding privacy and use of personal data. It is perhaps the biggest threat to Facebook's monetization opportunity.

The controversy in the US got bigger recently as Congress got involved over the case of the application Carrier IQ. Until as late as October Apple used the data gathering software in its iPhone and iPad products and still today remnants of the program exist in OSX 5 and will be swept clean in the next release although Apple have been swift to tell us that the program is switched off. Apple assured us that no keystroke, messages or personal data was ever recorded but only diagnostic information and it did not violate any privacy laws where each user has to agree to allow the information to be sent.

Facebook, obviously, records everything that we willingly put into it. The degree of personal information entered and shared with others could go a long way to understanding most of our most personal secrets let alone having nuggets of gold in pointing tailored adverts to us all.

Only this week, the Federal Trade Commission in the US had a suit settled by Facebook about its misleading its 800 million users about its use of their private data. It has now surrendered to be independently audited for the next 20 years. CEO, Mark Zuckerberg, has admitted that Facebook has made a 'bunch of mistakes' in a recent blog but assures everyone that his social networking empire is now back on course.

Crucial to all this has been the notion of 'Opt in' which was the traditional way that users of any service or website could agree to not only receive regular emails but to have their data effectively passed on or sold to other parties for their own use. This created the first waves of 'legitimate' spam in a Big Bang of data that still echoes around the web. Often the email address from which you originally 'opted in' is still being bombarded by a ton of spammers who bought the data. And once opted in, it has proved to be impossible to get off the lists as once the data is sold on it, like some sort of debt swap, has a life of its own and it is the data originator's - your - responsibility to opt out of all the spam sent to you one by one.

It is worth remembering on your Facebook account. Sadly, 'fixing' the problem doesn't really exist as once you have 'opted in' your data can be used by that site until you 'opt out' by which time that data may have been traded or passed on several times.

There may be no evidence to show that Facebook has ever traded that data but there is no doubt that it has been used to allow advertisers to get better access to you. This whole area has a way to go yet as one of the most prized assets within the $100bn valuation that Facebook has is not just access to your most personal data but that many of you have 'opted in' to allow that data to be used by Facebook in whatever way it wishes.

It's as good as owning your private details to be used and traded in whatever way Facebook chooses. So the next time you post a picture of your child or send a message to a friend, think about who 'owns' that data.

I foresee that privacy and data ownership will be the biggest issue of the Social Media boom and could take the shine off the big money IPOs for the future. As, strip it all away, that's all that Facebook has is data. 

But, my goodness, it has tons of it, and really personal stuff, on each and every one of us.

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