Facebook Is Too Close for Comfort

Facebook's been opening up lately, but some users think it's becoming a little too open. A new ad initiative revealed transaction data to Facebook friends, causing a furor among users. Now the site says it's sorry. But is it sorry enough?

Shopping spam
The offending initiative, called Beacon, shares transaction information for viral word-of-mouth marketing campaigns. If a user purchases a product from one of the more than 40 Beacon advertisers, all their Facebook acquaintances will be alerted of the purchase through the site's newsfeed feature.

Users and the blogosphere are furious, because they chose not to allow their Facebook friends to see that information. Because most of Facebook's applications are "opt in," many users didn't realize that they had to "opt out" of Beacon disclosing their purchase information through a small pop-up box -- every time they made such a purchase.

Even creepier, some sources say that Beacon also tracks information when its users aren't logged in to Facebook, and reports certain information back to Facebook servers even when users opt out.

In my opinion, word-of-mouth marketing involves voluntarily sharing information. The equivalent of a shopping tracking device is something entirely different.

Facebook apparently viewed Beacon's attributes as little different from the ratings and recommendations used by e-commerce giants such as Amazon.com (Nasdaq: AMZN) and Netflix (Nasdaq: NFLX). However, many users viewed it as going too far.

Such notifications ruin surprises and reveal prices paid. An article from The Washington Post gave a prime example. One man's wife was notified through Facebook of a ring he bought for her through Beacon partner Overstock.com (Nasdaq: OSTK), as well as the fact that he'd purchased it for half price. Other big advertisers in the Beacon campaign include eBay (Nasdaq: EBAY), Travelocity, Zappos, and Blockbuster.

Facebook has now agreed to make Beacon an "opt-in" program. The site announced today that it will allow users to turn it off entirely (before, it was on a case-by-case basis). Founder Mark Zuckerberg has apologized for a "bad job" with the release.

The Next Google?
Maybe Facebook is under a lot of pressure to prove its money-making capabilities; maybe there are some ego issues, since apparently Zuckerberg has boasted about creating "a completely new way of advertising online." (Hmm, sound familiar? Can you sense delusions of becoming the next Google (Nasdaq: GOOG)?) Meanwhile, Microsoft (Nasdaq: MSFT) has taken a stake in the site, and lots of people are hoping for an IPO. I'm not dying to see one, though.

Facebook may be the latest social-networking superstar, but for how long? There's definitely precedent for such sites to rise and fall -- remember Friendster? News Corp.'s (NYSE: NWS) MySpace seems to be losing steam, too. Maybe what users originally liked most about Facebook was its closed, non-commercial angle; that strategy is clearly changing.  

Social networking may be a big part of the Internet's future, but people still need more time to figure out just how much they want to -- and should -- share with the masses. If companies press too far, I wonder if there will suddenly be demand for anti-social networking sites.

Perhaps that's the real future.