Facebook Hit With Lawsuit: Could Mistrust Spell The End Of The Social Giant?

Facebook, the popular social network with over a billion users world wide, has just been hit with a class-action lawsuit. The allegations, revealed in the FT, are that Facebook systematically scans the content of private messages so it can sell the data to third parties such as advertisers.

Facebook’s entire business model is based on the fact that it monitors what users write, like and up-load in order to sell this information on to others. I have covered some of the concerns about this in my articles ‘How Facebook Exploits Your Private Information’ and ‘How Facebook Likes Reveal Your Intimate Secrets’. In principle, there is nothing wrong with Facebook using our data to make commercial gains. In the end, the service is free and Facebook has to make money somehow. However, my biggest concern is that the data mining activities are not as transparent as they should be.

Facebook has been criticized for this lack of transparency on many occasions, but two Facebook users now believe Facebook has gone too far. Users Matthew Campbell from Arkansas and Michael Hurley from Oregon have filed a class-action lawsuit on behalf of the over 166m Facebook users in the US. The accusation is that Facebook is violating the Electronic Communications Privacy Act by scanning and exploiting the content of private messages sent via the Facebook platform without prior consent by users.

The issue here is that ‘private’ messages are seen by most users as exactly that: private! The accusation is that Facebook identifies website links (URLs) contained in private messages and then searches these websites in order to profile users. In their accusation Campbell and Hurley argue: "Representing to users that the content of Facebook messages is 'private' creates an especially profitable opportunity for Facebook, because users who believe they are communicating on a service free from surveillance are likely to reveal facts about themselves that they would not reveal had they known the content was being monitored."

A Facebook spokesperson told Bloomberg that the allegations are without merit and that Facebook will defend itself vigorously. Of course they would say that. The trouble for Facebook is to strike the right balance between offering a customer service in form of a free social networking platform and shareholder returns, especially profits from selling data and advertising.

To answer my own question from the headline: No, I don’t think that this lawsuit will be the end of Facebook. However, I do feel very strongly about the need for better transparency about how our data is used and believe it can lead to a loss of trust that could seriously threaten companies like Facebook. To me, it feels like Facebook (as well as many other companies including Google, Yahoo! etc.) are trying to hide the data mining and analytics activities in their very long Terms and Conditions, to which most people sign up but rarely fully read or understand. Maybe a simple opt out with an alternative “paid for” service would be a good option.

What do you think? What is your view on Facebook exploiting your private data? Would you consider a “paid for” service if your privacy was guaranteed? Please share your views…