First appeared in USA Today
Google and Facebook might have finally gotten the average
consumer riled up about privacy.
For the past two years, each company has experimented with
different ways to divine more and more about how people live their lives on the
Internet, without sparking a revolt.
But the plans the rivals announced on Tuesday, which critics
say could dramatically rev up their respective abilities to gather intelligence
on individual Internet users, seem to have struck a chord. An informal and
unscientific survey of Web users by USA TODAY found a majority speaking out
against the new business practices announced by Google and Facebook.
"It's dangerous for two companies to have so much
personal data, regardless of whether the specific threats of that data
consolidation are immediately clear," says Sarah Downey, a privacy analyst
at software maker Abine.
Compelled to tap what many experts predict will be the next
big Internet mother lode — online advertising — Google and Facebook laid down
very big bets, during a week when European regulators are hashing out strict
new rules that could prevent much of what the tech giants seek to do.
Google signaled its intent to begin correlating data about
its users' activities across all of its most popular services and across
multiple devices. The goal: to deliver those richer behavior profiles to
advertisers.
Likewise, Facebook announced it will soon make Timeline the
new, more glitzy user interface for its service, mandatory.
Timeline is designed to chronologically assemble,
automatically display and make globally accessible the preferences,
acquaintances and activities for most of Facebook's 800 million members.
Google and Facebook have repeatedly insisted that the
changes are intended strictly to improve users' experiences.
"Facebook works the way it always has," says
spokeswoman Meredith Chin. "There is no new information on Facebook as a
result of Timeline, and no privacy settings have been changed with the
introduction of it. It's simply an updated version of the profile."
But the changes have stirred anger from many consumers.
Some, such as Joyce Norman, a writing consultant from Birmingham, Ala., are
considering ways to limit their exposure to Google's and Facebook's new
business practices. "Mine is not a lone voice crying in the
wilderness," says Norman.
Benjammin Gaultney of Montague, Mich., sees it differently,
looking forward to the possibility of more appropriate ads coming to his
screen. "You have to deal with ads all over the Internet either way,"
he wrote on USA TODAY's Facebook page. "Advertisers could at least try to
sell me something I'm actually interested in rather than life insurance."
Meanwhile, a high-stakes lobbying effort is unfolding in
Washington aimed at shaping policies favorable to U.S. tech companies and
blunting any potential move to follow Europe's more conservative proposals to
limiting online tracking by companies.
The tech giants sharply increased their lobbying spending
last year. Google spent $9.7 million in lobbying in 2011, up from $5.2 million
in 2010, says the Center for Responsive Politics. Facebook spent $1.4 million
in 2011 vs. $351,000 in 2010.
The driver: advertising revenue. The global online
advertising market is expected to swell to $132 billion by 2015, up from $80
billion this year, according to eMarketer. Google and Facebook are putting
their abilities to index individuals' online activity and behaviors into high gear
to tap into this market, analysts say.
"If they can make the ads more relevant, the logic
goes, they can increase the number of advertisers and the price they can charge
per click (on each ad)," says Alex Daley, chief investment strategist at
Casey Research. "Because the click will be from more qualified leads —
customers who are more interested in the product — they can grow the revenue
base."
But security analysts, privacy advocates and technologists
say consumers probably should be very concerned. While making richer behavioral
data more readily available to advertisers, Google's new data-correlating
practices and Facebook's new Timeline and Open Graph, a more powerful way to
express preferences on third-party websites, also tend to aid and abet more unsavory
uses.
Beware of cybercrooks
Richer personal details are very beneficial to identity
thieves and cyberspies, as well as to parties motivated to use such data
unfairly against consumers, such as insurance companies, prospective employers,
political campaigners and, lately, hacktivists, security analysts say.
"What these unilateral decisions by Google and Facebook
demonstrate is a complete disregard for their users' interests and
concerns," says John Simpson, spokesman for Consumer Watchdog. "It's
an uncommonly arrogant approach not usually seen in business, where these
companies believe they can do whatever they want with our data, whenever and
however they want to do it."
Google has a long history of running into privacy problems.
Its Gmail raised hackles early on when the search giant
decided to mingle advertising alongside users' e-mail. The move initially
concerned people because the ads' relevancy was linked to e-mails inside users'
accounts. For example, if a person was writing about buying a car, ads for cars
could appear alongside that individual's e-mail. To many, that felt like a
privacy intrusion.
The search giant maintains that such contextual ads, where
advertisers can bid on keywords that relate to a users' content, don't reveal
personal identities. Gmail users can turn some of the ads off, but adjusting
the feature requires some work.
Much of this type of product development is the result of
Google taking a very engineer-focused approach to mining data rather than
serving consumer interests, say industry experts. Google engineers want to play
with technology first, but they think about how the product plays with
consumers and privacy second, says IDC analyst Karsten Weide.
When Google tried to build its Buzz social network in 2010
from Gmail contacts, it ran into privacy problems. It began publicizing users'
contacts without asking. The Federal Trade Commission last year charged Google
with "deceptive privacy practices" in the handling of Buzz.
Google "did not respect" consumers' expectations of
privacy, says Helen Nissenbaum, a professor of media, culture and communication
at New York University. "They (Google) seem to be doing the same thing
here" with the privacy update.
Under terms of the FTC consent order, Google agreed to a
20-year independent review of its privacy practices.
But the changes announced Tuesday may again set it on a
collision course with the FTC.
"We do believe the proposed changes — they have not yet
been adopted — violate the FTC consent order," says Marc Rotenberg,
executive director of the Washington, D.C.-based Electronic Privacy Information
Center. Those changes could subject Google to monetary damages under Google's
agreement with the FTC, says Rotenberg.
But Rachel Whetstone, Google's senior vice president for
public policy and communications, says the company would not have proposed
privacy updates that run afoul of the FTC settlement.
"We try to be transparent about the data we collect and
give meaningful controls about how data is used," says Whetstone.
There are also concerns about Google's recent move to roll
activities on its Google+ social network into users' search results. The opt-in
integration of those two Google products mingles profiles, photos and posts of
people a user follows on Google+ into the user's search results if they choose.
Whetstone says it doesn't raise privacy issues because the
information is viewed only by the user.
Facebook's issues
Facebook has had its own issues, most recently in November
when the FTC announced a broad settlement that requires the company to respect
the privacy wishes of its users and subjects it to audits for the next 20
years.
The order, which claimed Facebook engaged in "unfair
and deceptive" practices in December 2009, stems largely from the way
Facebook handled information its users deemed to be private information.
On Tuesday it announced that Timeline will become the
default user interface for all members over the next few weeks.
Combined with the addition last week of some 60 apps
specifically written for Timeline, consumers can provide a detailed account,
often in real time, of the music they listen to, what they eat, where they shop
— even where they jog.
The deeper personal data of Timeline — which Facebook users
willfully share — are potentially online advertising gold for marketers and
advertisers. This is especially crucial, analysts say, as Facebook steamrolls
toward an initial public stock offering this year.
The company is under pressure to increase sales and profits
to meet the lofty expectations of shareholders, and online advertising is the
most logical place to do that. Facebook gleaned 89% of its estimated $4.3
billion in revenue last year, or about $3.8 billion, from online ads, according
to eMarketer.
"If Facebook has richer behavioral targeting data than
Google, then it has an edge up in relevance," says Casey Research's Daley.
"And an edge up in relevance is an edge up in revenue."
Some Wall Streeters believe the changes made by Google and
Facebook will have only an "incremental" effect on the battle between
the two giants in going after online advertising dollars.
Both companies continue to be dominant in their markets,
which "tend to be winner-takes-all markets," says Ryan Jacob of the
Jacob Internet fund. Google continues to hold strength in online search and is
a strong player in online video with YouTube and in mobile with its Android
operating system, he says.
But "Google has a long way to go before it can be
considered a credible competitor to Facebook," he says.
Google's moves, if anything, are "somewhat
defensive," he says. "For them (Google) to maintain their position in
search, it's important for them to be players in other areas," he says.
Channing Smith of money management firm Capital Advisors,
which owns shares of Google, is more optimistic. "If it continues to put
up numbers for Google+, it can be a competitor to Facebook," he says.
Rep. Ed Markey, D-Mass., who has already been pressing
Facebook to explain its tracking systems, said on Wednesday that he would ask
the FTC to take a close look at Google's new privacy policies.
"Google's privacy policy changes mean consumers can't
say no to sharing their personal information across Google's websites,"
Markey said. "Consumers, not Google, should be able to make these
decisions."
