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Public’s loss of privacy translates into big profits for online companies

Unlike most aspects of the financial crisis, it’s fairly easy to understand the Goldman Sach’s debacle. The company put its own interests ahead of its clients by encouraging them to invest in a mortgage product that the bank itself had bet would fail. But while politicians, the public, and the media take aim at the shenanigans of Wall Street, a similar breach in public trust is emanating from Silicon Valley amidst a wash of money and public ignorance.  The currency they’re manipulating though is worth billions: your personal information.

In April, Facebook launched Open Graph, its newest social platform that aims to turn the web into a more social experience by sharing user information and preferences with other sites.  Company founder Mark Zuckerberg heralded its launch as “the most transformative thing we’ve ever done for the web.” He’s right, but not for the reasons he says.

Facebook is chasing after Google’s dominance in the advertising market, which rewarded Google with $22.9 billion last year alone.  With personal information the increasingly valuable currency of the online marketplace, technology companies are scrambling to collect and share personal data with advertisers and other third parties.   In the process, your privacy is being compromised, with little debate or realization by society.

Over the past several years, as Facebook and other companies have launched new social tools and platforms, they have followed a fairly consistent rollout model: First, they automatically opt you into sharing your personal information. Then, they give you the option to opt-out but only after your privacy has been violated. After all, once information is out on the web, it is impossible to contain. The privacy controls you think you have are thus worthless.

In an effort to mitigate potential public backlash, both Facebook and Google are attempting to convince you that privacy is dead. Last December, Google CEO Eric Schmidt declared: “If you have something you don’t want anyone to know, maybe you shouldn’t be doing it in the first place.” A month later, Zuckerberg said privacy was “no longer a social norm.” But despite what the CEOs say, the public’s desire for privacy is far from dead. A recent study conducted by the University of California, Berkeley and the University of Pennsylvania found that 88 percent of people have refused to give out information to businesses because they felt it was too personal or unnecessary.

“Facebook and Google do not bear the cost of experimenting with our personal data – we do,” said John Clippinger, Co-Director of the Law Lab at Harvard University in a recent interview. And as research is beginning to illustrate, the consequences are immediate and oftentimes severe.  Danah Boyd, a social media researcher at Microsoft and fellow at the Berkman Center for Internet and Society at Harvard, recently relayed the story of a young girl and her mother who fled from an abusive father, only to have their location revealed as a consequence of Facebook’s ever-changing privacy policies. They, like most of us, couldn’t keep up with the company’s frequent and confusing privacy policy changes (at least six revisions in the past five years).  Even the experts, such as former Google employee and current White House Deputy Chief Technology Officer Andrew McLaughlin, have been burned by the myth of ‘control’ over personal information.  When Google launched Buzz, a feature that automatically shares the names of your most-emailed contacts, McLaughlin found his White House contact list blasted across the Internet within minutes.

Those who don’t mind sharing personal information with other companies should know that this process can impact their friends simply by association.  Two students at MIT last year demonstrated they could predict with 78 percent accuracy whether a Facebook user was gay based on the percentage of his friends that were gay.

Aggregating and publicizing information can of course be beneficial to society. Google Flu Trends for example, is able to estimate flu activity effectively two weeks before the Center for Disease Control by compiling search queries about the flu.  But the “public by default” policy pursued by both Facebook and Google over the last few years benefits companies, not society.

Without sensible regulatory oversight and an informed public, technology giants like Facebook and Google will continue to whittle away at the institution of privacy while raking in staggering profits. Goldman Sachs and Wall Street lobbied for deregulation, so that they could pursue wild-eyed schemes with less accountability. These companies asked us to trust them.  Let’s not make the same mistake twice.

Zeba Khan is an independent social media consultant and writer


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