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FACEBOOK DOES AN ABOUT FACE
Author: Douglas J. Wood, Reed Smith LLP

Although advertisers loved Facebook's new idea to incorporate advertising into everyday conversations between the social networking site's members, scores of Facebook users objected to the initiative – known as Beacon – and Facebook has agreed to make changes.

When Beacon was launched this fall, the program was set up so that when Facebook users made a purchase or otherwise engaged in an activity on a participant third-party website, their friends automatically would be notified of their actions via Facebook "newsfeeds."

The Beacon program caused a firestorm. Although the program provided opt-out options at the point of transaction at participant sites, as well as when users logged into Facebook, members complained that the opt-out screens appeared too briefly and often disappeared before they could respond. Some said they did not see the opt-out options, and that information regarding their activities was disbursed without their knowledge.

Recently, Facebook announced it had adjusted Beacon so that stories regarding their online activities will not be sent to their friends unless users specifically provide permission for such information sharing.

Facebook founder Mark Zuckerberg apologized for the anger that had ensued following the initial launch of Beacon, which had been called a "privacy hairball" among other unflattering names.

"We’ve made a lot of mistakes building this feature, but we've made even more with how we've handled them. We simply did a bad job with this release, and I apologize for it," he wrote in his blog.

Diamond in the Rough
The media reported incidents such as a planned surprise engagement that was ruined when a user’s girlfriend read about his ring purchase, and Christmas and Hanukkah surprises that were spoiled when family members and friends received feeds concerning purchases. The advocacy group MoveOn organized a petition demanding that Beacon be changed, and collected a reported 50,000 signatures from Facebook users.

Before users rebelled, advertisers—eager to engage more personally with consumers—flocked to Facebook. Some 60 advertisers, including The New York Times Company, Condé Nast’s site Flip.com, Epicurious, Travelocity and Overstock.com, had agreed to participate in Beacon and SocialAds, an initiative through which Facebook users could sign up to become “fans” of an advertiser. [See previous Adlaw by Request article, "Networking Ads Attacked"]

However, witnessing the Beacon backlash, advertisers responded that they did not approve of information being shared without users’ consent, and some participants either disengaged from or declined to activate Beacon, according to reports.

Advocacy groups pointed to Beacon’s launch as added evidence of the need for regulatory action. A public meeting sponsored by the Federal Trade Commission to examine behavioral marketing ended just before Beacon was released. The meeting had been convened in response to a petition filed last year by the Center for Digital Democracy (CDD) and US Public Interest Research G".roup (US PIRG).

“[I]n the few days since the [FTC meeting] has ended, a number of announcements have been made, including ambitious new targeted advertising schemes on the part of both Facebook and MySpace, that make clear the advertising industry’s intentions to move full-speed ahead without regard to ensuring consumers are protected,” CDD and US PIRG said in a statement following Beacon’s release.

Industry observers countered that Facebook’s willingness to reverse course indicates that market forces can reign in behavioral marketing practices to which consumers object.

Weight Control
The idea behind the original version of Beacon was to make it “lightweight so people wouldn’t have to touch it for it to work,” Zuckerberg stated.

“But we missed the right balance…. The problem with our initial approach of making it an opt-out system instead of opt-in was that if someone forgot to decline to share something, Beacon still went ahead and shared it with their friends.

“It took us too long after people started contacting us to change the product so that users had to explicitly approve what they wanted to share. Instead of acting quickly, we took too long to decide the right solution. I’m not proud of the way we’ve handled this situation and I know we can do better.”

Facebook says that users now must click “OK” before information is shared with their friends, and no stories concerning their off-site activities will be published without their permission. Users also have the option to delete stories they do not want published. The company release states that Facebook does not share user information with participating sites, nor does it sell user information.

However, Facebook is hanging onto the Beacon program, and the company will not provide an option to globally opt-out of the program, as some have requested.

Why This Matters:  Consumers have demonstrated that they are open to behavioral marketing tactics—so long as marketers inform consumers as to how and when such practices are being used, and consumers can control the extent to which they participate in such efforts. In short, the consumer is king.