Facebook and Google - Facebook's Anti-Google Fiasco

Facebook was caught red-handed last week being socially unfriendly to Google, its Silicon Valley competitor. It hired a public relations firm to plant negative stories about Google's privacy policies, and then it tried to hide its involvement in the whisper campaign. This is ironic, considering that Facebook is all about getting people to disclose everything about themselves.

This episode could be chalked up to corporate clumsiness, except that, in beating up on Google, Facebook was encouraging the same federal regulators it tries to keep away from its own business. Facebook needs to be more careful in choosing its friends and enemies.

Facebook and Google have been sparring for months over what level of access to information about their respective consumers each would allow the other. Some 600 million people give Facebook personal details about themselves in exchange for the ability to communicate instantly with relatives, friends and colleagues. Google, meanwhile, is trying to build a competitive social-media service to add to its core of search advertising.
Last year, Google began to block Facebook dell latitude d820 battery Dell inspiron 640m battery users from automatically populating their lists of online friends with the contacts in their Google Gmail address books. Facebook then told its users how to do this manually. Google responded by upgrading a service it launched in 2009 called Social Circle, which lets Gmail users find contacts on Facebook and other services.

Facebook next hired Burson-Marsteller to pitch stories on how Google is violating people's privacy through Social Circle. But the journalists and privacy commentators the PR firm contacted concluded that Google has done nothing wrong: If people freely provide information online, this information can be used by Google in the same way Google News is free to link to news articles that publishers make available for the taking.

Privacy expert Christopher Soghoian made public the emails he received from Burson-Marsteller soliciting an article criticizing Google. The emails, which he shared on a site called Pastebin, make for cringing reading. The pitch cites a recent agreement between Google and the Federal Trade Commission over unrelated privacy practices. "The FTC made it clear last month that Google had agreed to change its ways, and in so doing, the U.S. government gave Google Dell inspiron 1526 battery sony vgp-bps8a battery an imprimatur of credibility and trust amongst the American people," the PR email reads. "In light of the recent agreement between the government and Google, Congress and the FTC must immediately investigate this latest violation of online privacy."

The pitch not only was misleading but invited similar scrutiny of Facebook, the No. 1 target of privacy regulators. It's as if General Motors called for tougher regulation of Ford without stopping to think that any new rules would also apply to it. The situation was made worse when Burson-Marsteller threw its client under the bus, saying it had violated its own policies by agreeing to Facebook's request that it not disclose its client. Facebook, which urges its users to disclose all, was caught trying to remain anonymous. It admitted, "The issues are serious, and we should have presented them in a serious and transparent way."

Facebook doesn't need to hire a PR firm or run to the FTC. It can simply inform its users of any privacy concerns. Competitive markets will take care of the rest. Pressure from consumers in 2007 forced Facebook to drop its privacy-abusing Beacon advertising system. A year later, Google was forced by popular demand to increase privacy protections on its Chrome browser.

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At the end of the day, this dispute is about advertising dollars more than about privacy. Google wants a piece of Facebook's $2 billion in annual advertising revenues, hoping to build a similar social media network to boost its $29 billion in annual revenues.

The dispute is also a reminder that free services such as Facebook and Google come with a price. Consumers need to keep a truism in mind: If you're not paying for the product, then you're not the customer—you're the product being sold. Social media services such as Facebook take advantage of data that consumers disclose about themselves to enable advertisers to deliver ever more targeted marketing to them.

The benefits of social media are redefining people's expectation of privacy. The trade-offs of privacy versus communication are fluid and change faster than regulators can keep up. That's why it would be a mistake for Congress to pass any of the proposed new laws setting privacy expectations into stone.

Silicon Valley companies should resist as long as they can the regulatory capture that deadened innovation in industries from steel to autos. Lobbying for regulation instead of competing for consumers is a sign of an industry in decline. If Silicon Valley firms open the way for Washington to settle the competition among them, they shouldn't be surprised if politicians are only too happy to oblige.

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