Facebook Loses Advertisers As Concerns Deepen

    December 3, 2007
    WebProNews Staff

Things just keep looking worse for Facebook’s Beacon: Coca-Cola and other advertisers are opting out of the program; there may be legal troubles ahead; and some investigative security work shows that Beacon sends information about user activity even when logged out of Facebook.

Facebook Loses Advertisers As Concerns Deepen
Facebook Loses Advertisers As Concerns Deepen

Coca-Cola, one of the largest flagship partners in the program when it launched early last month, not only bailed on Beacon, saying they’d adopted a "wait and see" attitude, but agreed with New York Times blogger Louise Story that Facebook CEO Mark Zuckerberg had originally described Beacon as an opt-in program.

Even more disturbing than gradually taking away that ability – there was a point where Facebook users could opt out of all of it, rather than just one site at a time – was Facebook spokesperson Matt Hicks’ response to Story:

Mr. Zuckerberg had meant that users would be given the opportunity to opt out of having information sent out by Beacon, and the company had assumed that anyone who didn’t say no meant yes. 

And by that logic, if I don’t say no to you using my bathroom, I’m saying yes to you rummaging through my medicine cabinet.

Well, whatever the initial understanding of how Beacon worked, advertisers are bailing as user-backlash increases. Overstock.com let it go shortly after MoveOn launched its campaign, followed by Travelocity the next week.

That may have been just in time to avoid possible legal hassles coming out of New York and California. As William McGeveran pointed out on a Harvard Law blog when Facebook’s Social Ad program launched, such wrangled user-endorsements from Beacon could be a violation of privacy laws:

Privacy law, as it should, treats advertising uses differently from other uses. One of the four common-law privacy torts forbids “appropriation.” Specifically: “One who appropriates to his own use or benefit the name of likeness of another is subject to liability to the other for an invasion of his privacy.” (Restatement (Second) of Torts Section 652C) Even more significantly, several states including New York and California have statutory provisions that are similar. New York’s well-known statute creates both a misdemeanor and a civil cause of action for “[a]ny person whose name, portrait, picture, or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained.”

As this issue was also brought up in the New York Times at that point (the first week of November), it appears that Facebook ignored all warnings about privacy concerns, and did not attempt to address them until MoveOn made a proper stink about it.

What’s also not helping Facebook’s case is that Beacon is still sending information to Facebook even when users opt out or are logged off. Stefan Berteau did his own investigation, just a day after Facebook announced they would be "evolving" the Beacon program. Berteau found that Beacon was using cookies to silently track Facebook user actions:

"Despite the fact that I was not logged in, Facebook just received enough information to tie the activity I took on their affiliate to my individual account, which combined with the social data they already have, such as circles of friends, level of education, communication patterns, and geographic locations, would allow them to profile individual consumer behavior on a nearly unprecedented level of detail. "

Facebook eventually admitted that was going on, but said it was not using the data:

"When a Facebook user takes a Beacon-enabled action on a participating site, information is sent to Facebook in order for Facebook to operate Beacon technologically.  If a Facebook user clicks "No, thanks" on the partner site notification, Facebook does not use the data and deletes it from its servers. Separately, before Facebook can determine whether the user is logged in, some data may be transferred from the participating site to Facebook.  In those cases, Facebook does not associate the information with any individual user account, and deletes the data as well."

It begs the question, though, why is sending the information to begin with?

It looks like the troubles are just beginning for this program