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Facebook Tells FTC To Balance Privacy, Innovation

In commenting on the Federal Trade Commission's plan to protect online privacy, the social media site cautions the agency not to do anything that will hinder business development.

Facebook on Thursday made public 28 pages of comments it made on the Federal Trade Commission's plans to protect consumers' online privacy rights, detailing both the company's impact on the way in which individuals communicate and the shifting view people have about privacy.

The letter and responses to specific questions range from philosophical thoughts on innovation and Facebook's evolution to the role of social media in reshaping lives in regions such as Egypt and Tunisia.

Dated February 18, the letter was written by Michael Richter, Facebook's chief privacy counsel. While agreeing with the FTC's position that government should play a role in protecting individuals, Facebook said social media companies also must participate in order to foster innovation. As technology and the world change, consumers' opinions of privacy also evolve, Richter argued.

"The FTC's reexamination of privacy therefore must not only balance the public's demand for new and innovative ways to interact and share information against their interest in maintaining control over that information, but do so against a backdrop of continually evolving privacy expectations and preferences," Richter wrote. "For Facebook -- like most other online service providers -- getting this balance right is a matter of survival. If Facebook fails to protect the privacy of users adequately, those users will lose trust in Facebook and will stop using the service."

Users have, in fact, resisted several Facebook changes -- and have caused the social networking company to reverse course on some privacy-related moves. Late in 2009, the Electronic Privacy Information Center filed a formal complaint with the FTC regarding the social network site's changes. And there have been more complaints, letters, and probes since then. In January, Facebook's automated photo-tagging feature -- which uses facial-recognition software to put names to faces, without requesting account-holders' permission -- raised some privacy advocates' ire.

"While this feature may be appealing for those Facebook users that are keen to share every detail of their social life with their online friends, it is alarming to those who wish to have a little more anonymity," Graham Cluley, senior technology consultant at security software developer Sophos, said in a statement. "Rather than allowing users to opt-out of this feature, surely Facebook users should be given the option to opt-in. A recent Sophos poll showed that 90% of Facebook users think that all Facebook features should become totally opt-in. With this new feature, I'd say that this percentage is likely to rise."

In October, the company blocked some third-party developers after they were found to be transmitting user data -- something expressly prohibited in Facebook's developer terms. After several rocky periods in 2010, Facebook began working with privacy advocacy groups such as the Center for Democracy and Technology to make sure it addressed privacy issues.

Facebook's responsiveness to its users and to lobbying initiatives underscore the effectiveness of these approaches, the company said.

"We are the only major online service provider that allows users to vote on the changes if comments reach a pre-set threshold," wrote Richter. "Time and again, Facebook has shown itself capable of correcting course in response to user feedback and thereby continuing to build trust."

These steps, rather than extensive government intervention, protect individuals, Facebook said. The FTC, the Department of Commerce, and other groups recommend a three-prong approach: Integrated privacy protection where companies incorporate context-sensitive privacy protections throughout their organizations and products; individual empowerment and responsibility, whereby people are equipped to make the right privacy decisions for themselves, and companies give them more transparency and meaningful choice regarding the context of data-collection; and industry accountability, in combination with FTC enforcement, that addresses users' concerns while also accommodating rapidly developing technologies and user expectations of privacy.

"Facebook agrees that these three principles should be central to any effort to understand privacy in today's interconnected environment," the letter said.

However, Facebook underscored the importance of ensuring that privacy protections benefit -- but not frustrate -- users, and that privacy protections do not damage innovation, wrote Richter.

"Hundreds of thousands of application developers have built businesses on Facebook Platform," according to the letter. "To take just one example, games developer Zynga, creator of the popular Farmville game, has more than 1,300 employees and has been valued at $5.8 billion. Thanks to these innovations, the digital economy remains a vital source of jobs, growth, and investment, even in these challenging times."

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