Facebook, Privacy, And How It’s Affecting Facebook’s (and Marketers’) Future

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It’s no secret that Facebook is facing a privacy backlash. . . again.  Headlines ask if Facebook is at a tipping point, and many people give Facebook low grades for the way it has handled user privacy.

Despite the buzz about several high-profile people abandoning the social network, Facebook isn’t facing an immediate or meaningful problem with defections.  There is little evidence that significant numbers of people are defecting, and the impact of a couple of high-profile deleters is minimal.  Facebook’s value to users isn’t to connect with movers and shakers like Leo Laporte but with friends and family.   In fact, Facebook isn’t shrinking but growing;  despite a handful of deletions, Facebook has seen a net gain of 10 million active users since the new privacy changes were rolled out at the f8 conference. 

In my own informal survey on Forrester.com (with a very small sample size of 178 participants), just 4% claimed to have deleted their Facebook accounts due to privacy concerns, and there is reason to think this is overstated from the general population.  What is most interesting to me about my small survey isn’t the absolute results but the way the results changed depending upon how I promoted the survey.  At first, I invited followers on Twitter, and those early responses tended toward the concerned;  the Twitter crowd demonstrated a higher percentage deleting their accounts or changing their privacy settings.  But later I shared my poll with my Facebook friends, which include many people not “in the business” of marketing, technology, or social media, and as this group responded, I noted a significant jump in other responses, primarily, “I've made no changes whatsoever in how I use Facebook.” 

It was evident that early adopters, the tech savvy, and social media professionals—in other words, the people who follow me on Twitter—are concerned, but the average consumer who just likes to share photos and Farmville updates simply isn’t that worried.  And until concern grows among Facebook’s common users, the social network won’t face fatal and imminent repercussions.

 Don’t get me wrong—Facebook has reason to worry, but not because of the risk with an immediate migration out of Facebook;  after all, where would people go to do the sorts of sharing to which they are now accustomed (and addicted)?  News Corp. has done little to innovate MySpace, so despite its best efforts to capitalize on the Facebook privacy problems, MySpace isn’t likely to recapture any share of its past mojo. 

Instead, the threat to Facebook is “death by a thousand privacy cuts.”  The accumulation of lawmaker concerns, high-profile deleters, organizations raising consumer awareness, and security bugs (such as those found in Yelp, an initial “instant personalization” partner for Facebook)  can create growing and important problems for the social media leader.  These include not just the risk of eventual widespread abandonment of the platform but also:

• Consumers tightening their privacy settings, resulting in less marketing opportunities and value for Facebook.
• Consumers opting out of sharing with future instant personalization partners (which now include just Yelp, Pandora, and Microsoft’s Docs.com). 
• Consumers rejecting future Facebook programs, such as their promised geolocation check-in features. 
• Actions by lawmakers and regulators (not just in the United States but elsewhere) to respond to privacy concerns of citizens.
• Encouragement for the development of open source competitors, such as Diaspora, which could someday pose an appealing alternative to consumers.
• And perhaps most  importantly, the potential loss of trust and interest among large brands.  While a lot of attention is being given to consumers’ concerns and a small number of “deleters,” I am beginning to hear some serious apprehension from marketers about the association between their brands and Facebook’s privacy issues (and, in an unrelated matter, the launch of Community pages that deflect attention away from official brand fan pages.)

Facebook is not today at a tipping point, but that doesn’t mean it couldn’t get there.  How can Facebook positively impact its future without giving up the benefits of sharing?  The answer isn’t easy, but neither is it difficult.  Facebook has to create a strong positioning on the issue of privacy, and this cause is not furthered when Mark Zuckerberg promotes his world vision that privacy is dead (regardless of whether he’s right or wrong).  Facebook also needs to adopt more transparency, giving consumers greater visibility into what is being shared and under what circumstances.  Facebook also needs to improve its own complex privacy settings to ease the burden of managing one's own privacy (a change that is reportedly already underway).

Finally, and most importantly, Facebook needs to proactively manage user expectations and enhance knowledge around the topic of privacy.  Gone are the days when it could announce a change, ignore the feedback, and unilaterally alter  privacy policies and settings.  The time has long since come for the company to listen, engage, and collaborate with users.  And, of course, changing the “instant personalization” to “near-instant personalization” by making the program opt-in instead of opt-out wouldn’t hurt (but I’m not holding my breath on that).

What do you think?  Has Facebook hit a tipping point?  Can it earn back user trust?  Your comments are very welcome!