Facebook faces investigation for privacy violations news
02 June 2008

Facebook, the second largest social networking site in the world with an estimated 100 million-plus registered member, may find itself in hot water in Canada after allegations it violated the country's privacy laws.

Mark ZuckerbergLatest news is that the authorities have decided to act upon the complaint made by four law students by launching an investigation spearheaded by the federal privacy commissioner. Around seven million Canadians are users of Facebook.

The 35-page complaint filed by four University of Ottawa law students alleges 22 separate violations of Canadian privacy laws by the California-based company under the Personal Information Protection and Electronic Documents Act (PIPEDA).

The complainants assert that Facebook's privacy settings and terms of use are too unwieldy and hidden to be picked up by many of the site's younger users or those new to the Internet.

Another complaint is that Facebook's default privacy settings are set to the maximum amount of sharing. The complainants say that the default setting should be set to the maximum for privacy, allowing the user to "opt in" to share information.

Canadian law mandates that sensitive information such as a person's address, sexual preference, birth date and school, can't be disclosed without gaining express consent. On Facebook, users must specifically change their settings to keep that information private, a feature the complainants state should have been provided by default.

The fact that the complaint had been brought against the site by college students is ironical, considering that Facebook was started as a college networking venture by former Harvard student Mark Zuckerberg in his dormitory in 2004.

However, in recent times it has seen a meteoric rise on the internet and is all set to surpass the current No.1 social networking site Myspace if it continues its current rate of growth. It may eventually end up with a user base of 300 million.

It is this amazing popularity of Facebook, which has enhanced the social networking experience with several innovative features that has garnered the interest of corporations far and wide.

Facebook had received its first investment of $500,000 in June 2004 from PayPal co-founder Peter Thiel, followed a year later by $12.8 million in venture capital from Accel Partners, and then $25 million more from Greylock Partners and Meritech Capital Partners.
 
Yahoo had made one of the earliest offers to acquire Facebook, way back in September 2006. However, talks broke down soon after. Google and Microsoft had both evinced interest in acquiring stakes in Facebook, and the latter had acted on its intention by paying $246 million for a 1.6-per cent stake in October 2007. This purchase had valued Facebook at around $15 billion.

This was followed soon after by a $60 million investment by Asian billionaire Li Ka-shing in November 2007 for a 0.4 per cent stake in Facebook, which he subsequently doubled in March 2008 by putting in $60 million more. These deals had also valued the company at around $15 billion.

Now, after its failure to acquire Yahoo and increase its internet presence, Microsoft is reportedly looking for a bigger chunk of Facebook. (See: Microsoft looks at Facebook after losing Yahoo!)

The complaint also says Facebook fails to: 

  • Identify the purposes for which it obtains personal information. 
  • Safeguard personal information from unauthorized access. 
  • Explain its policies on the personal information that is disclosed to third party advertisers and application developers. 
  • Destroy personal information of users who terminate their use of Facebook services.

In response, Facebook has refuted the claims, saying that the complaint ignores key elements of the company's policy.

"We've reviewed the complaint and found it has serious factual errors - most notably its neglect of the fact that almost all Facebook data is willingly shared by users," Facebook chief privacy officer Chris Kelly said Friday

Kelly said Facebook has worked with Ontario's information and privacy commissioner to create a brochure and video that will educate users about the site's privacy controls.
Under Canadian law, the privacy commissioner has up to one year to investigate the complaint and make recommendations. The office plans to launch a Web site next week to educate youth about privacy on the Internet.

However, the privacy commissioner can only make recommendations, and Facebook would not be compelled to make the changes. That has to be enforced by legislation.


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Facebook faces investigation for privacy violations