December 11, 2007

Ask poor Mark Zuckerberg, forced to eat humble pie over Facebook Beacon. When it brings public shame to a brand, popular buzz is a mortal threat indeed, considering that a brand is but a reputation. Can Mark Zuckerberg's formal apology, reported by Louise Story (*), stop the run on Facebook trust? Future will tell.

While the Facebook November fumble (1) makes for a good story, we should not forget the major lesson it illustrates. Mandated transparency is the most efficient way to rein in privacy abuses. Take for instance Robert French's finding. As quoted by Louise Story, "[this university professor's] students - nearly all Facebook users - were shocked to learn about Beacon". Think again that Beacon was a most self-revealing mechanism. Lest they frighten their users away, sites normally prefer to bury privacy invasion behind the soothing gobbledygook of loophole ridden policies.

Breaking through users' blissful ignorance, transparency works because our Information Age has a particular affinity for buzz and thus enables enlightened individuals to band together and strike back. By the same token however, personalized advertising is here to stay. In an age where we exist by staying connected, an ad targeted to our personal profile and displayed in the right context is more satisfactory than some random generic message. As Paul Collins (**) reminds us in contrast, from 1971 to 1985 "[the Lorillard Tobacco Company] spent $3 million for advertisements in [...] 540 million paperbacks". But by 1983 R.J. Reynolds had determined smokers were unlikely to read books. How more annoying can you get?

Those who profit from personalized advertising insist it brings greater customer satisfaction while those who fight for privacy stress its means are abusive. Both sides are right. To solve this apparent contradiction, one must look beyond the vocabulary.

Advertising revolves on the right to provide sensorial inputs, aural, visual, olfactory even. As such, advertising is a perfectly legitimate activity. If there is an issue, it has to do with the negotiation of these rights. When Richard Waters tells us about plans by Adobe and Yahoo to attach ads to PDF documents (***), what matters to me is neither why nor how, but who gets what. As I ask my browser to download IRS forms in PDF format and find my attention sold to the highest bidder, will I get a tax reduction or will the IRS pocket what would amount to a hidden tax increase?

Personalized advertising uses advertising to reach its target. The issue though is the personalization process and stems from a confusion between results, more relevant advertising, and means, more privacy invasion. As long as the advertising industry focuses on resulting benefits and puts down concerns about privacy, as long as privacy advocates focus on abusive means and ignore economic realities, the fight can only go to the bitter end.

Why not recognize that the personalization process is but another recommendation mechanism? When Facebook causes a targeted ad to be displayed, it uses its in-depth knowledge of the user's profile to select, i.e. to recommend, a particular ad. We can therefore apply the criteria we use for all such mechanisms, i.e. decentralization, responsibility and protest process. Facebook ad targeting mechanism is a highly centralized affair but, as we already observed in the case of search engines, the main issues rest with responsibility and redress process. Hence the measures we suggest the FTC mandates, i.e. tracking transparency, formal protest process and third party confinement of the profile database (2).

There is nothing wrong with his business model. But Mark Zuckerberg should meditate my recommendation lest the users buzz him out of business.

Philippe Coueignoux

• (*) ...... Apologetic, Facebook Changes Ad Program, by Louise Story (New York Times) - December 6, 2007
• (**) .... Smoke This Book, by Paul Collins (New York Times Book Review) - December 2, 2007
  ............ note the low average price, about $5 per thousand books, which betrays the throwaway quality of the medium.
• (***) .. The online ad bandwagon, by Richard Waters (Financial Times) - November 29, 2007
• (1) for a more complete review, check Facebook in the "company references index" for Philippe's fillips
• (2) see the comments to the Federal Trade Commission I sent in response to its public inquiry on "Ehavioral Advertising"