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Stay Thirsty, My Friends (at Facebook)

Amid much anticipation, Facebook unveiled its new privacy controls today.  It’s a good move for Facebook to clear-up confusion about who can see what I’ve shared on my pages.  They’ve made it easier to be sure that only my friends can see my photos, comments, or activities.


It’s also a good move to let users turn-off sharing of information with third party applications hosted on Facebook. (Now, what I’d really like is an easier way to turn-off all messages from my friends using Farmville.  Hopefully that’s in the works.)


Facebook is making these moves partly to placate a handful of professional privacy critics, as we described on our post this week.  But as with most moves made in reaction to critics, there’s a chance Facebook might have moved too far. 


As part of this change, Facebook is making it trivial for users to stop applications and websites from knowing anything about you.  If lots of users select this option, I’m afraid it could restrict Facebook’s use of targeted advertising (those ads on the right side of your Facebook pages) and their new instant personalization program.  Here’s why we should all be concerned if everyone opts-out of sharing anything:


d1d5f0cefbcbf52b5260f33e6d7eecba8c8428c1 First, we’ll still see ads, only they won’t be so relevant to our age, location, marital status, or interests. Admittedly this is not a big deal for users who manage to ignore most online advertising.  But in one respect I think most of us are like that guy in those great Dos Equis commercials: “I don’t often look at ads; but when I do, I prefer relevant ads.”


Second, and far more concerning, is the effect on Facebook’s ad revenue if applications and websites can’t use targeting or personalization for users who choose the most restrictive sharing option.  Targeted ads pay much better than generic broadcast ads, simply because people are far more likely to respond to targeted messages.


Right now you might not care much about Facebook’s ad revenue.  But you might start caring if falling ad revenue forced Facebook to cut spending on things like server capacity and speed, content vetting, quality control, or development of new features and access for mobile devices.


You’d also start caring if Facebook over-reacted to privacy critics by slowing-down its innovation.  I’m talking about innovations like “instant personalization“, which helps selected websites customize your content based on your Facebook profile.   And innovation like a social plugin for content websites, which makes it so easy for you to refer articles or news to your Facebook friends.  Both of these innovations help create a personal, social Internet experience, and they do it though sharing of information.


Facebook users want the social network experience, and we want controls to stop our boss from seeing photos and comments we intended to share only with friends.  We should be happy with the new privacy controls Facebook announced today.   The professional privacy critics, however, won’t be satisfied.   Their aim seems to be the demise of any online service that uses targeted advertising to make it free for the rest of us.


Stay thirsty, Facebook.  We need you guys to keep innovating.


–Steve DelBianco