May 27, 2010, 2:12 PM

Facebook’s new privacy controls likely won`t affect retailer’s efforts

Facebook has introduced new privacy controls. But the new settings probably won’t affect most retailers’ social media initiatives, say experts, since the most active users—who most programs are geared to—are less likely to be concerned about privacy.

Facebook CEO Mark Zuckerberg yesterday announced that the social network will introduce new privacy controls that cut down on the number of steps needed to limit who can see content posted by a Facebook users, as well as a tool to block all third-party applications providers from accessing their information.

The social networking giant, which has come under intense pressure recently over privacy, is also limiting the amount of basic user information that everyone on the site can see by allowing users to control who gets to see their lists of friends, along with their personal pages. That information was previously available to all of the more than 400 million users of Facebook around the world.

“We believe in privacy,” said Zuckerberg during a news conference announcing the changes. “We believe in giving people control. But more and more, people want to share information. As long as they have good control over that, I think that's where the world is going."

The changes came after the site has faced a barrage of recent scrutiny regarding its privacy settings. The Wall Street Journal last week reported on an August academic paper that found Facebook, MySpace and other social networking sites leak data to advertising companies that marketers could use to find consumers’ names and other personal information—even though the social networking sites have pledged that they don’t share that information without consent.

The researchers found that Facebook and other social networking sites send user names or ID numbers, which are linked to personal profiles, to advertisers when a user clicks on a display ad. An advertising company that receives that information can then use that information to look up a user’s profile. If a user has made their information public, that profile can contain a slew of personal information.

While advertisers typically receive the URL of the page when a user clicks on an ad, they receive a string of letters or numbers that can’t be linked to an individual. “Now instead of just tracking user behavior, the advertiser can know who this behavior belongs to,” says Craig Wills, a computer science professor at Worcester Polytechnic Institute who co-authored the August study. “That opens up new concerns.”

The problem, says Wills, is users have to have an expectation of what information is being given to whom. “From a consumer standpoint we would like to think consumers have an opportunity to understand what the issues are and I’m not sure that they do,” he says. “We know that advertisers would like more information, but from the consumer standpoint when information goes to advertisers without a clear reason or explanation as to why it’s going to them there’s a concern.”

Those concerns have grown, he says, as Facebook has added features that link user information to other sites. Facebook last month added a feature that allows retailers such as Levi Strauss & Co.’s Levi.com to add a Like button to their sites. Each action a shopper makes is then shared both on the retailer’s site, as well as on Facebook. Facebook also added another feature that automatically connects users to three outside web sites—Yelp.com, Pandora and Docs.com—unless they specifically opt out of the service. Yesterday’s announcement allows users to block third-party applications providers from accessing their information with one click.

However, the retailers most likely to engage shoppers by adding a Like button or other Facebook-oriented marketing campaigns aren’t likely to opt out of allowing third-parties, such as retailers, to access their information, says Ben Edelman, an assistant professor at Harvard Business School who studies Internet advertising.

“The customers who are most likely participating are those who are less concerned about privacy and most open to sharing,” he says. But, he adds, they may come to regret that lack of privacy later. “Many people have done things when they were young that they later thought wasn’t well-advised,” he says. “That’s the reality. They might later regret allowing these companies to access their information. While privacy norms change, you can’t help feel that this change has been particularly rapid.”

Because of that rapid change, he wonders whether the public’s use of social networks may eventually diminish. “There was certainly a moment when every company had a marketer focused on their social strategy,” he says. “And without a strategy you couldn’t be considered a leading-edge marketer. But now I have to wonder if this might be a flash in a pan or if people will continue using these sites. I don’t think the answer is so obvious.”

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