Law Technology

Lessons from Facebook?s Beacon Misstep

By Ed Felten

Facebook recently beat a humiliating retreat from Beacon, its new system for peer-based advertising, in the face of users’ outrage about the system’s privacy implications. (When you bought or browsed products on certain third-party sites, Beacon would show your Facebook friends what you had done.)

Beacon was a clever use of technology and might have brought Facebook significant ad revenue, but it seemed a pretty obvious nonstarter from users’ point of view. Trying to deploy it, especially without a strong opt-out capability, was a mistake. On the theory that mistakes are often instructive, let’s take a few minutes to work through possible lessons from the Beacon incident.

To start, note that this wasn’t a privacy accident, where user data is leaked because of a bug, procedural breakdown, or treacherous employee. Facebook knew exactly what it was doing, and thought it was making a good business decision. Facebook obviously didn’t foresee their users’ response to Beacon. Though the money — not to mention the chance to demonstrate business model innovation — must have been a powerful enticement, the decision to proceed with Beacon could only have made sense if the company thought a strong user backlash was unlikely.

Organizations often have trouble predicting what will cause privacy outrage. The classic example is the U.S. government’s now-infamous Total Information Awareness program. TIA’s advocates in the government were honestly surprised when the program’s revelation caused a public furor. This wasn’t just public posturing. I still remember a private conversation I had with a TIA official who ridiculed my suggestion that the program might turn out to be controversial. This blindness contributed to the program’s counterproductive branding such as the creepy all-seeing-eye logo. Facebook’s error was similar, though of much smaller magnitude.

Of course, privacy is not the only area where organizations misjudge their clients’ preferences. But there does seem to be something about privacy that makes these sorts of errors more common.

What makes privacy different? I’m not entirely certain, but since I owe you at least a strawman answer, let me suggest some possibilities.

(1) Overlawyerization: Organizations see privacy as a legal compliance problem. They’re happy as long as what they’re doing doesn’t break the law; so they do something that is lawful but foolish.

(2) Institutional structure: Privacy is spun off to a special office or officer so the rest of the organization doesn’t have to worry about it; and the privacy office doesn’t have the power to head off mistakes.

(3) Treating privacy as only a PR problem: Rather than asking whether its practices are really acceptable to clients, the organization does what it wants and then tries to sell its actions to clients. The strategy works, until angry clients seize control of the conversation.

(4) Undervaluing emotional factors: The organization sees a potential privacy backlash as “only” an emotional response, which must take a backseat to more important business factors. But clients might be angry for a reason; and in any case they will act on their anger.

(5) Irrational desire for control: Decisionmakers like to feel that they’re in control of client interactions. Sometimes they insist on control even when it would be rational to follow the client’s lead. Where privacy is concerned, they want to decide what clients should want, rather than listening to what clients actually do want.

Perhaps the underlying cause is the complex and subtle nature of privacy. We agree that privacy matters, but we don’t all agree on its contours. It’s hard to offer precise rules for recognizing a privacy problem, but we know one when we see it. Or t least we know it after we’ve seen it.

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Full post as published by Freedom to Tinker on December 10, 2007 (boomark / email).