European Commission Considers Amending User Data Laws on Growing Online Privacy Concerns

Facebook has been no stranger to privacy issues over the years. The most recent case in Europe involves the company’s practice of “harvesting” user information in order to help advertisers better target their corresponding markets. ^[1] Previously, Facebook’s frictionless sharing concept was also a cause for privacy concerns. More recently the European Commission (EC) has considered revising laws regarding how sites handle user data with respect to advertisers. Facebook leads the social marketing arena with competitors such as Google (NASDAQ:GOOG) and LinkedIn (NYSE:LNKD).

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Amendment to EU Privacy Laws Could Hurt Facebook

Facebook takes information from users’ profiles – including interests, political views and even locations – and gives it to advertisers in order to target their ads. ^[1] Facebook has responded to the backlash by saying that the information it provides to advertisers remains “aggregate and anonymous”, which means that specific user names and related information is not provided. Additionally, the technical point remains that once a user signs up for Facebook, they automatically consent to their information being used by the company. ^[2]

While the debate is likely to rage on further, the EU’s data protection unit is already considering an audit into Facebook’s working practices. This has also prompted a drive to amend the current data protection laws in the EU, which could see restrictions being placed on online targeted advertising. Not only is this bad news for Facebook’s business, but also bad timing considering that the company is seriously thinking of going public by mid-2012.

We currently value Facebook at around $45 billion.

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1. Facebook faces EU curbs on selling users’ interests to advertisers, The Telegraph [↩] [↩]
2. Facebook Terms [↩]