There was this from the Progress & Freedom Foundation: “By giving users powerful new tools to further protect their privacy, Facebook has employed a potent weapon to deal with marketplace apprehensions: self-regulation.”

This from Democratic Senator Charles Schumer of New York: “Facebook has heard the call of its users and realizes that much greater privacy protections are needed. This is a significant first step that Facebook deserves credit for.”

This from the ACLU: “After months of privacy-failing moves, Facebook is finally friending privacy again….While it’s true that users have more control than they did yesterday, there are still important steps that must be taken.”

And, finally, this from the Electronic Frontier Foundation: “The changes are pretty good, though more is needed.”

Consensus, then, seems to be that the privacy settings Facebook introduced today are an improvement over the old. That said, it’s important to remember that the old were sorely lacking, that the new were introduced under duress and that they DON’T do one thing that critics have been clamoring for: Make the highest privacy settings the default.

Which is really pretty weak, when you think about it, as Jeffrey Chester at the Center for Digital Democracy notes:

Facebook made some positive changes today, but only because of political pressure from policymakers and privacy advocates on both sides of the Atlantic. Mr. Zuckerberg’s failure to acknowledge the political realities don’t bode well for Facebook’s future approach to privacy: he appears to be living a Alice in Digital Wonderland fantasy, where he only makes changes on privacy because he has the goodwill of its users in mind. Just last December 9, after all, Facebook made one of its typical self-reverential announcements that it was “rolling out easy-to-use tools to empower people to personalize control over their information.” These changes triggered a user revolt, letters from Senators, an opinion ordering a reversal from the EU, and concern from the FTC.

Today, a coalition of privacy groups, led by the Electronic Privacy Information Center, filed a complaint with the Federal Trade Commission asking the regulators to force Facebook to turn on its old settings. The complaint, and Facebook’s response, are at the bottom of this post.

I have no idea if the Feds will end up getting Facebook to do anything. But the privacy groups can still accomplish a lot without injunctive relief.

“What we’re going to do is drag Facebook into the halls of the FTC, and have them examine all of their policies,” says Jeff Chester, executive director of the Center for Digital Democracy, one of the groups backing the complaint.

That could certainly slow down the company. So could inquiries from European governments, which have become more inclined to regulate American technology outfits. Just ask Microsoft (MSFT).

The real concern for Facebook is if the private sector starts complaining. Recall that Facebook only reversed course on its ill-fated Beacon project two years ago after advertisers started questioning the program, which was designed to share your shopping and branding choices with your pals.

Since that debacle, marketers seem to have gotten comfortable with Facebook, and Mark Zuckerberg has a real ad business now. And I’ve yet to hear a peep from big brands with second thoughts. But if the privacy blowback gets big enough, that could change.

Again, I don’t think the proposition that Facebook is offering its users–the opportunity to share every detail about their online lives with anyone with a browser–is an inherently bad one. There are lots of people who are comfortable with the notion.

The problem is that Facebook has switched course midstream. It started off as a site that limited users’ information to the outside world and now wants to invert that. But the switch has been badly explained, done in such a way that many users don’t understand what happened.

Facebook says this criticism is overblown and that lots of people do understand the switch. Spokesman Barry Schnitt says at least half of Facebook’s users have made changes to their privacy settings since the new rules went into place. Which means, he argues, that at least half of its users understand them.

Entirely possible. But Facebook now has up to 350 million users. Which means that tens of millions of users could be unaware of what’s going on. And they’ll only find out when their party pictures or baby videos or whatever turn up on Google (GOOG).

Facebook could easily solve this by clearly explaining that its “Share With Everyone” option really does mean everyone and–crucially–making it an opt-in proposition. But then adoption rates would shrivel, and the company wouldn’t be able to pull off its goal: Making as much of the site as public as possible.

This one isn’t going away anytime soon.

EPIC’s complaint, followed below by Facebook’s response:

EPIC-FacebookComplaint –

Facebook’s response:

We’ve had productive discussions with dozens of organizations around the world about the recent changes and we’re disappointed that EPIC has chosen to share their concerns with the FTC while refusing to talk to us about them.

Facebook’s plan to provide users control over their privacy and how they share content is unprecedented in the Internet age. We have gone to great lengths to inform users about our platform changes, beginning with our July announcement; founder Mark Zuckerberg’s open letter to our 350 million users; our robust press and analyst outreach; the notice-and-comment framework for our new privacy policy; and simple customization tools for users.

We’re pleased that so many users have already gone through the process of reviewing and updating their privacy settings and are impressed that so many have chosen to customize their settings, demonstrating the effectiveness of Facebook’s user empowerment and transparency efforts. Of course, the new tools offer users the opportunity to decide on privacy with every photo, link or status update they wish to post, so the process of personalizing privacy on Facebook will continue.

We discussed the privacy program with many regulators, including the FTC, prior to launch and expect to continue to work with them in the future.

Yesterday, BoomTown wrote about the status of the regulatory approval for the Microsoft-Yahoo search and online advertising pact.

While none of the key constituencies wanted to comment or make predictions about the outcome of the government scrutiny, most seem to agree that the MicroHoo partnership is more likely to be approved than not.

One of the few vocal critics of the deal, though, is Jeffrey Chester, the executive director of the Center for Digital Democracy, a public interest group.

CDD, along with several other consumer groups, recently sent a letter to the Justice Department’s antitrust head, Christine Varney, expressing concern about the control and collection of consumer data in the deal.

CDD also has been querying Microsoft (MSFT) and Yahoo (YHOO) directly about the data collection and privacy implications of the deal, which is something the government should be doing.

So, to further get a glimpse into MicroHoo’s arguments, here is a set of important questions Chester asked then that were answered in a memo by the pair:

What specific data collection, interactive ad technologies and targeting applications will be used for search under the 10 year deal?

Today, Yahoo! collects data about Yahoo! visitors to our search product and uses that information to deliver products and to customize advertising and content, among other purposes described in its Privacy Policy. Microsoft and Yahoo! have each adopted industry-leading privacy practices with respect to search. For instance, under Yahoo!’s global data retention policy, Yahoo! anonymizes user log data within 90 days with limited exceptions for fraud, security and legal obligations. For search specifically, Yahoo! will convey certain data to Microsoft to fulfill a user’s search request. This includes the query and the IP address. Microsoft will anonymize this data sent to it by Yahoo! in accordance with Yahoo!’s announced data retention policies. Microsoft is only permitted to use search data that it obtains under the deal to operate and improve its search services and for no other purpose.

Will Yahoo’s behavioral targeting technologies for search still be used?

Yahoo! does not currently employ behavioral targeting in search. [Ed. note: Not completely true; see press release from Yahoo here on new targeting capabilities.]

Will any of Yahoo’s targeting apparatus be incorporated in any way with Microsoft Advertising, including with Bing?

No. This deal is limited to search, and as noted above, Yahoo! does not employ behavioral targeting in search.

Will search ads be sold by either Yahoo or Microsoft that provide for multimedia results, such as video?

Video advertising is still a small and growing area and as such, it’s impossible to predict what video ads in any form, including what a potential video search ad, could look like several years from now.

How may this deal affect the Yahoo! Newspaper Consortium?

The partnership Yahoo! has with the newspapers is broad and includes everything from content distribution, advertising cross sales, and technology platform development, to the display of Y! sponsored search listings on the newspapers’ own Web sites. Yahoo! Does not see the Microsoft deal as having an immediate impact on its newspaper consortium dealings. However, by combining its platform with Microsoft’s, Yahoo! and Microsoft will be in a position to offer the Newspaper Consortium and other web publishers more competitive bids for search syndication deals than either company can offer separately.

What ad research and development will be shared or done in common?

It is premature to speculate about the exact research that will be done, but the increased scale that will result from this search deal is expected to significantly enhance the ability to conduct meaningful research in a timely manner.

What rationale was used to embrace the 3 month data retention time? Why isn’t a shorter retention time adopted?

Yahoo! did an extensive analysis and review of all our data systems globally in 2008. Yahoo! arrived at 90 days retention as the right timeframe for most of its log file data that allows it to deliver the industry-leading products and services its users expect from them, but that also minimizes the duration of time Yahoo! holds data in identifiable form. It’s important to note that some of Yahoo!’s log file systems retain identifiable data for less than 90 days but none will hold data longer except for a limited number of specific systems dedicated to fraud and abuse and to meet legal obligations.

How do you envision Yahoo remaining viable when it no longer has a meaningful independent search service, given the need to have a coordinated search/display environment for digital marketing?

Future growth in online marketing will come from shifting spend from offline advertising to the online world. Offline advertising spend is disproportionately held by the largest advertisers and they control the vast majority of ad spend. Yahoo! has the leading position in branded advertising and Yahoo! also serves the needs for the growing market of performance advertising. So this deal with Microsoft enables Yahoo! to deliver a fully integrated solution that meets marketers’ needs at scale. Through this deal, Yahoo! retains a revenue stream in search without incurring the costs of developing a search platform or engine. Yahoo! will get paid an 88% TAC rate while eliminating significant expenses, enabling Yahoo! to invest more heavily in other areas of focus: amazing audience properties, web products, enhanced display advertising capabilities, and fantastic mobile experiences.

After all the investor hubbub over the oh-no-they-didn’t deal between Yahoo and Microsoft starts to die down a bit, the pair are now embarking on the path that is the only way toward proving the efficacy of them joining together.

That would be getting a variety of state, federal and international regulators to say yes to the wide-ranging online advertising and search arrangement they announced last week so they can start making it work.

According to sources at both companies, a variety of filings will be made this week, including one to the Securities and Exchange Commission that should provide more details of the partnership.

When it was unveiled last Wednesday, the companies said Microsoft (MSFT) will run search technology for the two, while Yahoo (YHOO) will sell the premium search advertising.

That SEC filing could answer a number of questions some still have about the deal, such as whether there is a large break-up fee that Microsoft would pay Yahoo in case the deal is scuttled.

That’s just the outcome that Microsoft and Yahoo are trying to avoid.

“We think of it as an outreach effort to explain how we are creating a strong No. 2 to Google,” said one source close to the situation. “The main goal will be to show that a better competitor in the marketplace is a good thing.”

While the companies are prepping for opposition from Google (GOOG), sources close to the thinking at the dominant search company said it is more likely to be muted and indirect.

That’s especially true since a MicroHoo makes Google–currently under a lot more government scrutiny than ever before–look like less of a bully.

Thus, Google’s tactics would entail less direct statements and more pointing out the discrepancies between what Microsoft said when Google tried to get approval for a search deal with Yahoo last year and what it argues now.

“They will probably not be that obvious, but they will be there still,” said Microsoft CEO Steve Ballmer to me, in an off-hand remark at the software giant’s Financial Analyst Meeting last week.

It’s a game of legal chicken that Ballmer knows well.

Already, for example, Microsoft and Yahoo execs have been aggressively reaching out to major publishers and advertisers to get their staunch support.

That included calls immediately after the deal was announced last Wednesday to such execs as Martin Sorrell of the WPP Group (WPPGY) and Jeff Zucker, CEO of NBC Universal, a unit of GE (GE).

In Washington, D.C., both companies have legions of lawyers to try to make sure the Justice Department, which will review the case due to its antitrust implications, has all the information it might need.

And, more to the point, they want to avoid the debacle that took place when Yahoo and Google tried to get approval for their failed deal last year.

That deal was ended by Google after it became clear that Justice was going to fight it by arguing that top search companies hooking up hurt competition and stifled innovation.

In addition, there might be Congressional scrutiny, with possible hearings, similar to those held when the Yahoogle deal was pending, such as in the Senate Judiciary Antitrust Subcommittee.

And, of course, there are actually independent groups concerned and they have also been in contact with regulators.

“There are questions that must be answered regarding the collection and sharing of consumer data by the two companies,” said Jeff Chester, executive director of the Center for Digital Democracy, a D.C.-based group that works to promote consumer privacy and protection online, in a statement last week. “While the rationale for the deal is to provide some much needed competition to Google (and income for Yahoo), the further consolidation of the global digital advertising system should be a concern to Internet users, privacy advocates, online marketers, and competition regulators.”

Sources said Microsoft and Yahoo also plan to petition regulators in the European Union this week, which is likely to be most concerned about privacy issues involved in their union.

They will also be doing the same in other key countries worldwide, such as Korea, Taiwan and Brazil.

And, finally, given how involved state attorneys general became in beaching the Yahoo deal to partner with Google, they also will be starting outreach to key states, such as California, where Silicon Valley-based Yahoo is headquartered.

“Once again, it will be the Lawyer Employment Act of 2009,” joked one person close to the deal. “At least, that shows there is some economic benefit to this deal already.”

While we all wait in breathless regulatory anticipation, here are interviews I did at last year’s Senate hearings on Yahoogle, with lawyers from Google (David Drummond), Microsoft (Brad Smith) and Yahoo (Mike Callahan).

Incredibly, they are the very same lawyers who will be pretzeling themselves in entirely different shapes than they pretzeled themselves a year ago.

I would expect nothing less!

Here’s the video:

]]> http://allthingsd.com/20090804/yahoo-microsoft-regulatory-filings-begin-this-week-let-the-legal-game-playing-begin/feed/ 0 http://allthingsd.com/20090708/google-chrome-os/ http://allthingsd.com/20090708/google-chrome-os/#comments Wed, 08 Jul 2009 14:35:07 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=20895 So Google has finally copped to developing an operating system–Chrome OS, a software platform “created for people who spend most of their time on the Web, and…designed to power computers ranging from small netbooks to full-size desktop systems.”

It is an extraordinary market play. And an unsettling one. For it seeks to place Google (GOOG), which already collects vast amounts of data about our Internet use, at the very center of our information experience.

The privacy implications are, of course, horrendous. And while Google will inevitably dismiss such concerns as paranoid and argue that any data the company might collect at the OS level will be used only to improve its services and benefit users, it should still give us all pause. Because when it is finally launched, Chrome OS will be yet one more deep well of consumer data to which Google will have access.

There are already quite a few such wells, including Google Search and Chrome, that profile user interests and surfing habits: Gmail, which gives the company access to our email conversations, and Google Voice, which gives the company access to our spoken ones. Add to this Google Street View and Latitude, a service that tracks the physical location of its users, and mobile and desktop operating systems and, well…that kind of consolidation of Internet-based services around a single dominant company should give us all pause.

Lest we forget, Google is in the behavioral targeting business. Why would people ever use an OS developed by a company whose business is based on meticulously recording and analyzing their online behavior? Because they enjoy using its other services, I suppose. But there is a privacy-vs-ease-of-use tradeoff here. And with Chrome OS, it is unprecedented. Further, while Google might tout its “don’t be evil” motto as reason enough to trust the company with our data, there are other entities that don’t always share that sensibility. Remember, it wasn’t so long ago that the federal government tried to force Google to turn over user search data to the Justice Department…

“Competition in the OS market should always be welcome, but Google is the special case,” Marc Rotenberg, executive director of the Electronic Privacy Information Center, told Digital Daily. “It has become dominant across many essential Internet services–search, mail, video, online apps, and advertising. Coupled with Google’s growing profiles of American consumers and reluctance to adopt meaningful privacy safeguards, we expect that antitrust authorities in the US and Europe will view Google’s entry into the OS market with enormous skepticism.”

Jeff Chester, executive director of The Center for Digital Democracy, echoed Rotenberg’s concerns. “Google’s new OS has to be placed under the data collection X-Ray by US and EU privacy regulators and advocates,” he said. “Any expansion into the marketplace by either Google or Microsoft should generate intense scrutiny, especially for the privacy implications. These two are engaged in a global data collections digital arms race, which has far-reaching implications for consumers and their information.”

]]> http://allthingsd.com/20090708/google-chrome-os/feed/ 10 http://allthingsd.com/20071214/googleclick/ http://allthingsd.com/20071214/googleclick/#comments Fri, 14 Dec 2007 08:17:48 +0000 John Paczkowski http://digitaldaily.allthingsd.com/20071214/googleclick/ Ironic, isn’t it, that Google has played a key role in the investigation of the family ties that could prevent Federal Trade Commission Chairwoman Deborah Platt Majoras from voting on its proposed merger with DoubleClick.

Yesterday, the Electronic Privacy Information Center and the Center for Digital Democracy filed a petition with the FTC demanding that Majoras recuse herself from voting on the Google-DoubleClick deal because her husband is a equity partner at Jones Day, the law firm representing DoubleClick in the merger. Moreover, Majoras herself was once a partner at Jones Day as well. “A reasonable person with knowledge of the relevant facts would question the chairman’s impartiality in this matter,” the two consumer advocacy groups said in the filing (PDF). “The direct and predictable financial interest is on the spouse of the chairman, whose firm does not simply represent a party before the commission but who himself is directly responsible for the firm’s business development in Washington, D.C.” (In a statement issued by the FTC today, Majoras corrects what she calls “key factual errors” in the petition and lays out her case for fulfulling “the duties entrusted to me when I was appointed and confirmed.”)

Now, the FTC claims that Jones Day is advising DoubleClick only on the European Commission’s review of the merger. “We learned only yesterday that Jones Day is representing DoubleClick before the European Commission, not the (U.S.) Federal Trade Commission,” FTC spokeswoman Claudia Bourne Farrell told News.com. “Jones Day has not appeared before the FTC on this matter.”

But a page on Jones Day’s Web site seemed to say otherwise–at least until it was deleted. But while it may have disappeared from jonesday.com, it did not disappear from Google’s cache.

Jones Day is advising DoubleClick Inc., the digital marketing technology provider, on the international and U.S. antitrust and competition law aspects of its planned $3.1 billion acquisition by Google Inc. The proposed acquisition will combine DoubleClick’s expertise in ad management technology with Google’s Internet search and content platform. The transaction is currently under review by the U.S. Federal Trade Commission and European Commission.”

Now why would Jones Day pull that page (and beyond that, why would it be so ignorant of the dangers of Google’s cache)? It was “confusing,” the firm says. “The language in the posting apparently was confusing, since EPIC cites it as evidence JD is representing DC at the FTC, and we never have,” Jones Day partner Joe Sims told News.com. “So we took it down and will rewrite it to eliminate the confusion.”

The FTC is currently reviewing the matter with its ethics officer.

]]> http://allthingsd.com/20071214/googleclick/feed/ 2 http://allthingsd.com/20071114/facebooks-owen-van-natta-speaks/ http://allthingsd.com/20071114/facebooks-owen-van-natta-speaks/#comments Wed, 14 Nov 2007 08:19:19 +0000 Kara Swisher http://kara.allthingsd.com/20071114/facebooks-owen-van-natta-speaks/

Here’s a video interview I did while at the Monaco Media Forum with Facebook’s Chief Revenue Officer Owen Van Natta about the new ad product from the hot social network–dubbed “social advertising”– that has everyone’s knickers in a knot.

Excuse that metaphor, but I am traveling in England, so it seemed exactly the right one to describe the horror that many have expressed that ever more targeted advertising is going on on the Internet.

Imagine that!

In any case, listen to Van Natta–the longtime and often unsung Facebook exec who struck the sweet deal with Microsoft and is the one most charged with making it so with that pretty explicit chief revenue officer title of his.

[ See post to watch video ]

Of course, the controversy that has mounted in the United States after Facebook unveiled its efforts last week to use its vaunted “social graph” to tout new ad initiatives that would target users’ behavior and leverage their friends comes as no surprise.

Pretty much every hot online service that has come down the pike–from AOL to Google–has gotten sucked up into this debate, even as more ads have become more targeted and scrutiny of online consumers has grown exponentially.

Facebook’s giant faux pas? Founder Mark Zuckerberg had the cheeky nerve to actually brag about it all at the ad event in New York when his nefarious plot was unveiled.

“Nothing influences a person more than a recommendation from a trusted friend,” Zuckerberg said when he introed the ad scheme. (He also rather cloddishly noted: “The next hundred years will be different for advertising, and it starts today.”)

Well, he kind of had to say it all, didn’t he, especially with MySpace announcing a me-too ad program the day before and with Google slapping him silly with a PR-fueled attack the week before with its the-jury-is-still-out OpenSocial initiative?

Most of all, of course, Zuckerberg had to with the still-fresh $15 billion valuation of Facebook from its $240 million investment deal with Microsoft screaming for justification: There has to be a real business model in here!!

Of course, some of the press and a whole lot of privacy groups have been calling foul about the plan, even though it is just not the biggest leap ever taken related to personal data being used to target consumers by advertisers.

For years now, a range of contextual and behavorial data has been sucked out of online services and used to better aim ads right back at them. Facebook and MySpace are, of course, crossing yet another line, by more explicitly linking data you input into the mix.

That includes the possibility that they could broadcast your purchases to your friends, which some claim is illegal and requires written consent, because apparently you become some sort of unpaid celebrity shill by doing so.

I very much doubt that–all you might become is a pretty irksome friend hawking your deep affinity with, say, Krispy Kreme donuts. (Hey, this picture is an unpaid endorsement, but: Kara says you should eat them constantly until you go into a diabetic coma!!)

That has not stopped the noisy protests, of course. Just yesterday, two more consumer groups asked the federal government–specifically the typically ineffective Federal Trade Commission–to look into the new ad plans by both Facebook and MySpace, calling their efforts a violation of privacy.

“MySpace and Facebook are like the digital-data equivalent of Fort Knox for Madison Avenue marketers,” wrote Jeffrey Chester, executive director of the Center for Digital Democracy in a letter to the FTC. “It is a kind of one-stop data shop for marketers.”

Nice metaphor by Chester, but let’s remember we don’t really rely on that gold locked away anymore to bolster our currency, and the treasure of social-networking data might prove to be just as useless.

In fact, I am more concerned that these ad plans turn out to be underwhelming, proving Facebook and all sorts of social-networking businesses are more fun than, well, actual profit-spewing businesses.

I think the bigger question to ask: What if it doesn’t work so well?

Sorry for being so jaded, but the tracking of online activities is something that will only get more and more customizable over time and is hard to argue with if users choose to share that information directly or via becoming a “fan” of a product.

Like I said: Profoundly annoying, potentially goofy, possibly inane, all a resounding yes! But illegal? Um, no.

Or, as Zuckerberg also said at the ad rollout in New York last week, Facebook is–well, he hopes anyway–an “ad-supported business.”

Oh, that.

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