Facebook's New Privacy Settings Spark a Public Spat

It was only a matter of time until someone decided to challengeFacebook legally. Social media and privacy are constantly at odds, with service providers trying desperately to create boundaries and encourage users to blow past them. Bigger networks, more friends and boatloads of user-generated content translate to more traffic, eyeballs and cash in the bank.

Last week, Facebook announced new privacy settings that would allow users to protect their content from unwanted viewers more easily. But the new features were also accompanied by default settings that make information more easily seen. That means users would have to actively seek out and change their privacy settings. The defaults are there to encourage users to share more, which would enrich interaction . . . and enrich Facebook's investors and employee shareholders.

Yet, some feel the new measures go too far, and it looks like regulators will have a chance to weigh in. That's because the Electronic Privacy Information Center released a statement on Thursday announcing that it had filed a complaint with the Federal Trade Commission, "charging that Facebook's recent changes to user privacy settings violate federal consumer protection law." Joined by nine other parties, EPIC is calling for an investigation into the matter, and it wants Facebook to be required to "restore privacy safeguards."

Millions of Interested Participants

According to Marc Rotenberg, executive director of EPIC, "This is the most significant case now before the Federal Trade Commission," made crucial by the fact that Facebook has 100 million U.S.-based subscribers. "The company should not be allowed to turn down the privacy dial on so many American consumers," Rotenberg continued. Worldwide, Facebook has more than 350 million users, a threshold it crossed last week.

In response, Facebook said in a statement: "We've had productive discussions with dozens of organizations around the world about the recent changes, and we're disappointed that EPIC has chosen to share their concerns with the FTC while refusing to talk to us about them." Company spokesman Andrew Noyes also said several regulators were consulted before the change to privacy settings, with the FTC among them.

For Facebook, the need to increase user interaction is salient. The company has taken steps that suggest an initial public offering is on the horizon, including creating a "super-share" structure that will keep control in the hands of early employees, investors and company founders. A company's entry into the public markets is much easier if it can show a larger base of revenue (among other factors), especially one that is clearly growing.

Primping for IPOs

The changes to Facebook's privacy settings come amid a flurry of activity in social mediacompanies, as these services seek to increase usability -- and actual use -- to bolster their revenue in preparation for share offerings. Twitter is cagey about its IPO ambitions for the coming year. LinkedIn has been a bit more open, though it hasn't provided a time frame. Both Twitter and LinkedIn announced new features this week designed to stimulate end-user interaction.

The organizations joining EPIC in the complaint are the American Library Association, the Center for Digital Democracy, the Consumer Federation of America, FoolProof Financial Education, Patient Privacy Rights, Privacy Activism, the Privacy Rights Now Coalition, the Privacy Rights Clearinghouse and the U.S. Bill of Rights Foundation.