the audit

Audit Notes: Facebook Abuses Its Network-Effect Advantage, Qs for Goldman, Acropolis Now

April 30, 2010

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The Electronic Frontier Foundation has a timeline of “Facebook’s Eroding Privacy” that everybody who uses the site ought to read.

Here’s how it started off, in 2005:

No personal information that you submit to Thefacebook will be available to any user of the Web Site who does not belong to at least one of the groups specified by you in your privacy settings.

And here’s December:

Certain categories of information such as your name, profile photo, list of friends and pages you are a fan of, gender, geographic region, and networks you belong to are considered publicly available to everyone, including Facebook-enhanced applications, and therefore do not have privacy settings. You can, however, limit the ability of others to find this information through search using your search privacy settings.

There are a few stops in between and one after. It’s sort of like watching the frog boil.

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EFF’s smart analysis:

Viewed together, the successive policies tell a clear story. Facebook originally earned its core base of users by offering them simple and powerful controls over their personal information. As Facebook grew larger and became more important, it could have chosen to maintain or improve those controls. Instead, it’s slowly but surely helped itself — and its advertising and business partners — to more and more of its users’ information, while limiting the users’ options to control their own information.

Basically, you have a corporation (run by a 25 year old who “doesn’t believe in privacy“) that locks its users in through network effects and then steadily strips us of our privacy. Want to protest? You can quit the site—and lose a critical communications platform.

Business Insider’s Courtney Comstock has some good questions for Goldman Sachs (an Audit funder):

Do you create markets for yourself (prop trade) with the same clients you make markets for (client trading)?

Were the loans inside the MBS you sold… fraudulent?

Did you know they were fraudulent? Did you know they were not fraudulent?

The Economist has the magazine cover of the year (since Fortune nixed Chris Ware’s):

Just awesome.

(h/t Felix Salmon and Zero Hedge)

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.