Facebook’s Anti-Privacy Monopoly

May 3rd, 2010 by rubenr

Many people have been complaining about the changes Facebook’s made to it’s privacy practices over the past few months, including U.S. Senators.  So I thought it was about time to write a post about it.  I’ve actually written a chapter on Facebook and Privacy in the forthcoming book “The Offensive Internet”.  Alas, it’s been in editing for so long that I fear much of it is going to be dated by the time it comes out in November.  So here’s a blog post.

First off, let me just say that I’m a huge fan of Facebook.  Let me also say that I think there’s probably only room for one dominant player in the “general” social networking space, and that in the United States, Facebook is likely going to be it.  That said, I’m also a huge fan of privacy and of free-market competition.  The real reason Facebook’s been clawing back user control over private information, and exposing more and more user info to third parties, isn’t because of some grand shift in social norms or the the conceptualization of online privacy.   Rather, it’s simply the result of what happens when a company develops a natural monopoly due to network effects:  all of a sudden they can charge more without offering additional benefits.  In this case, that “charging” occurs by extracting more value (your private info) from users without offering additional desired benefits  or services.

What does that mean?  Well, let’s take a look at the graph below that I threw together.  A few years ago Facebook and Myspace were engaged in heated competition over users, and Facebook only controlled about 30% of the Market.  As the Graph shows, things have changed, with Facebook in control about 84% of the market for “general” social networking today.  As Facebook has grown, and as users have become more entrenched, much of the Privacy-friendly functionality used to initially attract users has disappeared.  Replaced instead with many public-by-default  (if not public-with-no-other choice) options.

What gets me the most isn’t so much that Facebook’s developed a monopoly in this market.  As I said, that’s pretty much a given, and user privacy issues aside Facebook’s got a good product to offer.  What irks me is the way Facebook’s gone about establishing itself through what I see as anticompetitive practices, specifically, prohibiting users from using their username and password to log in to other websites or services.   I’m sure you’ve noticed this.  If you want to load or export contacts from G-Mail to most other online services, like Meebo, LinkedIn, etc.  You simply share your username and password and the service imports what you want.  Various aggregators for content from multiple sites also use this model.  But you can’t do this with Facebook, they prohibit it.

Facebook’s long claimed the reasoning behind it’s no-password-sharing policy is user privacy, and to prohibit sharing of user information to third parties without the consent of your friends (ie your friends haven’t consented to you sharing the fact that they’re friends with others).  Well that’s clearly hogwash since now who you’re friends with is public information according to facebook.  But the no-sharing password policy lives on.  Sites and services that desire to interact with Facebook must use “Facebook Connect”, which means you interact with Facebook on Facebook’s terms and using it requires logging in to Facebook FIRST.   The effect is to further leverage Facebook’s market power.

Let me put my concerns into a real-world example.  Let’s say a user no longer feels comfortable with having their photos on Facebook because of it’s recent privacy-degrading trend.  (After all, most of my friends are shocked when I point out that all their photos are now publicly viewable by default.)  There’s an incentive there for some other photo-sharing site to develop a tool to help people export photos, but interacting with Facebook through it’s approved channels won’t allow for this.  Sharing your username and password with a trusted competitor on the photo-sharing front, however, would.   The effect is to create an incentive for Facebook to remain privacy friendly, but Facebook’s basically neutralized the threat of any such competition.  They’re also preventing any service that might help you port content from one social network to another (thereby reducing the transaction costs of switching entrenched users from one site to another), and has sued Power.com for trying.

The biggest response I get from people when I point out these arguments is that “you can just delete your account”.  But really, no, I can’t.  Nor do I want to.  I like using Facebook too much, and not having an account would feel like being a hermit. Facebook use is becoming a somewhat integral part of our society.  But that doesn’t mean I can’t argue and fight against what I see as harmful anticompetitive conduct that destroys the bargaining relationship between Facebook users and Facebook, Inc.

If this post interests you, I recommend checking out “The Offensive Internet”, edited by Martha Nussbaaum and Saul Levmore when it comes out this November, published by The Harvard University Press.

UPDATE: It was brought to my attention that the graph formerly mis-quoted Zuckerberg. (I actually pulled the quote after checking two sites with a similar mis-quote, which was actually initially someone paraphrasing… not quoting… Zuckerberg).


30 Responses to “Facebook’s Anti-Privacy Monopoly”

  1. Re: Acct deletion – You can press the delete key, but it does not actually delete the profile because you can return to the site 6 months later, and log back in and all your info will be there just as you left it.

    FB has been lying and otherwise obfuscating what exactly happens with the contents of a deleted accounts for months now through the continual rewording of the TOS and privacy policy, which BTW, are both jokes.

    As for FB having become an “integral” part of society? LMAO. I don’t think so. Only if you LIVE on FB and your life IS about FB. I still have friends in the real world that I see face to face on a regular basis sans Facebook. There is nothing “integral” to my life that FB provides that I couldn’t get from an RSS feeder and/or just picking up the phone and calling my friends and asking how their day went.

  2. [...] embargo, quiero aprovechar para enlazar aquí un gráfico que se ha publicado hoy en DeObfuscate y que deja ver muy bien la evolución de Facebook en este ámbito. Las [...]

  3. Todd Gardiner says:

    I disagree with the statement that Facebook is extracting more value from your personal data, but not offering an exchange of services.

    The main reason for the new sharing rules this month was so that their two new services could be enacted. The Like button and the partnership with Yelp, Pandora and MSDocs require *some* sharing of information. If you do not use these services (e.g. you don’t browse those sites), your information is not shared.

    As for the photo-sharing example, is there another photo-site where your pics are not public? If so, can’t you just upload all of the photos in one batch, much as you did to get them into Facebook to begin with? Or, in this scenario, did Facebook somehow become the only location that these photos are stored?

  4. rubenr says:

    Todd, thanks for the comment. I guess what I meant when I said that they weren’t offering an exchange of services was that facebook isn’t offering services users desire. The new services arguably offer more to Facebook’s third-party business partners than to users. Of course, the value of a particular service is in the eye of the beholder, I admit.

    And while no one forces you to store photos on Facebook, the issue is using one set of policies to entrench users, and then switching the policy later on when you’ve acquired market power. There are transaction costs associated with porting your content out of facebook. My argument is that these costs are being artificial driven higher by facebook’s no-password sharing policy. Thus the bargaining relationship between the user and facebook is skewed in Facebook favor in a way it wouldn’t be if the market was competitive (ie, if it were competitive, we’d see the same services, but with more privacy features users desire, in particular, many of the default-opt-ins might be default-opt-outs).

  5. @Todd

    Way to gloss over what info is shared by default **unless** the user specifically opts out via a 5 step process.

    Sure, only “some” info is shared with those (so far) 3 applications and websites. As long as you’re OK with apps that you did not specifically authorize, having access to and sharing with partners unknown, your name, relationship(s), current city, address, phone #, education, interests, groups and “likes,” everything is just fine.

    Resources:
    http://tinyurl.com/2fv49gj
    http://tinyurl.com/36bpq8h
    http://tinyurl.com/2eb7rjg

  6. Daniel says:

    What bothers me the most is that facebook did develop a monopoly in the market and is slowly eliminating their competitors.
    Facebook is not private and at this point I don’t think it will ever become a place where your personal information will be kept secure, no matter how much people complain.

  7. Whenever Facebook degrades my privacy, I cut my “friends” list by ~10% … thus reducing the value of what they’re trying to sell to their advertisers. Try it! Also I NEVER click on Facebook advertisements, and of course avoid posting anything which I don’t want my Mother et al. to read (^_^)

  8. [...] In an essay and handy infographic, DeObfuscate lays out the inverse relationship between Facebook’s growing market share and the erosion of user privacy. [...]

  9. Oracle Guy says:

    “Facebook use is becoming a somewhat integral part of our society.”

    Please, what are you smoking? This is one of the silliest comments I’ve ever heard. It shows how disconnected you are with the REAL world- you know, the one where you can actually DO things. Not some junk-laden website that would rape your mother for a few fresh email addresses. If you think Facebook is that important or is anywhere near being a “somewhat integral part of our society”, I think you need to up your meds.

  10. rubenr says:

    Oracle Guy: Maybe we’ve got different ideas of what “integral” means, and maybe my word choice was a little grandiose, but when a particular good or service has 450 Million Active Consumers (the entire U.S. population is only 309 Million), it’s at least a pretty important aspect of society. It’s an efficient mode of communication that lots of people have grown to rely on, whether rightly or wrongly in your opinion.

  11. [...] In an essay and handy infographic, DeObfuscate lays out the inverse relationship between Facebook’s growing market share and the erosion of user privacy. [...]

  12. pastork says:

    I agree that Facebook (FB) is an integral social networking tool. I work with youth and young adults and the ONLY effective way to communicate with them regarding important dates and details is through FB. (That is, more effective than telephone calls, even those to Mom and Dad for the youth, and face to face conversations. If I really want them to remember something, I need to send it via FB. I also use FB to keep in touch with friends from college and seminary who are all over the country and former students of mine who live in Japan. It is less expensive than making a phone call or receiving one via cell phone. It provides individuals the opportunity to share exciting news with a large group of people all at the same time. Though, I do admit, it is little weird to have a friend announce a marriage or pregnancy via. Facebook.

    Ironically, parents say yes to FB because of the increased privacy settings in comparison to Myspace and even free emails. Thus, I do feel that with an already lowered sense of personal boundaries and expected privacy, Facebook is increasing the vulnerability of youth who are using FB by lowering and changing their privacy standards. This is an issue which is beyond marketing standards, it is an issue of safety.

  13. [...] Politics, Law, and Technology | Facebook’s Anti-Privacy Monopoly « DeObfuscate The real reason Facebook’s been clawing back user control over private information, and exposing more and more user info to third parties, … is simply the result of what happens when a company develops a natural monopoly due to network effects. (tags: facebook privacy) [...]

  14. David Taylor says:

    Way to gloss over the fact that userid/password sharing is a gigantic sucking security hole that should never be used by anyone. Only a fool would give an entity as irresponsible as Facebook the ability to rifle through one’s other service accounts. The converse is just as true.

    Sure, Facebook’s policy is pretty one-sided. They want you to give them your other passwords, but don’t allow other services to log in.

    Criticism of that stance would be valid in a world where allowing services to search (and possibly post) your private data on other services was a good idea. If you are concerned about privacy, sharing logins between services is one of the worst actions imaginable. Who really cares about the snow depth of reciprocity on top of an iceberg of security and privacy troubles?

  15. [...] Facebook’s (lack of) privacy practices have been getting worse over the last several months too. Here are a few detailed posts about Facebook’s privacy practices that are worth reading: Top Ten Reasons You Should Quit Facebook Facebook’s Anti-Privacy Monopoly [...]

  16. [...] afgelopen tijd is er flink wat ophef rondom de nieuwe mogelijkheden die sociaal netwerk Facebook in haar systeem bouwt. Het lijken [...]

  17. [...] DeObfuscate: Facebook’s Anti-Privacy Monopoly The biggest response I get from people when I point out these arguments is that “you can just [...]

  18. [...] DeObfuscate: Facebook’s Anti-Privacy Monopoly The biggest response I get from people when I point out these arguments is that “you can just [...]

  19. [...] 2010) Apparently, Facebook has a 84% marketshare on the “general social media” market. (Rubenr, 2010) There are over 400 million (!) users, worldwide. (Facebook, 2010) The majority of these users [...]

  20. [...] The worst part is that the privileged complacency for privacy stems from on high. Zuckerberg is definitely not an ally. Why would he be? Eroding your privacy correlates with him getting richer. [...]

  21. I have been to your site a few times now, and this time I am adding it to my bookmarks :) Your pages are always relevant, unlike the same-old stuff on other sites (which are coming off my bookmarks!) Rock on!

  22. [...] a big fan of Facebook and we are developing games for the platform.  While many  ruminate over the implications of Facebook’s privacy changes I am much more concerned by the implications of other policy changes towards [...]

  23. Kevin says:

    I am one of many who has closed my Facebook account and very happy to feel that my personal information is somewhat under my control again.

    There is one value that is more important to me than just about anything else – it’s called ‘respect’. Facebooks behavior over the past few years toward its users in this regard has been nothing short of deplorable – a history of broken promises where increased market share (read virtual monopoly) apparently means a given right to screw their customers (sorry, users – their customers are third parties who PAY them to access your personal information).

    On top of this, they have tried to cover up the extent of their ‘about face’ by being deliberately vague and providing overly complicated and ineffective user controls.

    If you feel confident that they have now ’seen the light’ and ‘all will be well’, then you are more trusting than me.

    In my view their activities need to be investigated and quickly.

  24. [...] para mostrar este gráfico que se ha publicado en DeObfuscate. Muestra cómo la política de privacidad de la red social va evolucionando con el [...]

  25. [...] Con­nec­tions to the impossib­il­ity of quit­ting, Facebook’s pri­vacy is con­tinu­ally worsen­ing at a wor­ry­ing rate. (danah boyd rant; scary employee inter­view.) And Zuckerberg’s [...]

  26. [...] DeObfuscate’s been away for about a month as we worked on other projects (and got married). But we’re back! Before we get to a new post, here’s a note on our post on Facebook’s Anti-Privacy Monopoly. [...]

  27. Rain Wilber says:

    My only real problem with Facebook, is that the site forces a person to be devoted to there own ego mentality, and the increase thereof.

    For some reason a Jimi Hendrix lyric keeps popping into my head about Facebook:

    “But who in your measly little world
    Are you trying to prove that
    You’re made out of gold and, eh, can’t be sold”

  28. [...] real concerns and more voices will be raised as and when Facebook spreads its tentacle. This post (Facebook’s Anti-Privacy Monopoly) summarizes the current concerns of [...]

Leave a Reply