Wednesday, February 18, 2009

Facebook's About-Face: Data Grab II

In a dramatic reversal of direction, Facebook has pledged to amend its user agreement after inciting user uproar related to its new Terms of Service (TOS).  On the Facebook blog, Zuckerberg explained, "Over the past couple of days, we received a lot of questions and comments about the changes and what they mean for people and their information. Based on this feedback, we have decided to return to our previous terms of use while we resolve the issues that people have raised."  

What this change makes clear is that from a public relations and communications perspective, users are king in the land of Facebook—users’ status in the legal world is still to be decided.  The group, "People Against the New Terms of Service (TOS)" now boasts nearly 88K members, with over 1,300 comments in opposition to the company's efforts to control and own user data.  The issues over Facebook's terms of service, however, underscore a paradox at the crux of Facebook's business model.

While the company is pressured by investors and management to better monetize its user base (after all it is a profit-making enterprise), aggressive efforts to monetize users are met with fierce opposition.  Many users are loath to have Facebook use their personal information for marketing purposes. Yet this data is Facebook's only real unique asset, and any meaningful economic profits will likely come from manipulating, sharing, and storing user data.  The company is obviously aware of this paradox, which is reflected in a communications strategy in which the lawyers act as the aggressors by putting more teeth in the TOS and Zuckerberg placates users with friendly language on his blog, rhapsodizing about "principles" and "philosophy."  In the end, this strategy conceals changes made to the TOS and keeps users happy by making them feel like they have been heard from and respected by management.  This is nothing new from Facebook, as a similar strategy was used in rolling out the NewsFeed functionality, which was also met with user protest.