The U.S. Federal Trade Commission (FTC) recently announced that it intends to create guidelines on Internet privacy. These guidelines are the FTC’s attempt to add a layer of transparency between consumers and marketers, and to protect consumers from abuse of their data by social networks, search engines and location tracking on cell phones.

The FTC’s announcement comes in the wake of complaints lodged by a number of lawmakers, privacy groups, and consumers. These complaints seem focused on the privacy practices of Facebook, which is currently the guerilla of social networking. Facebook hosts over 400 million users globally and allows its customers to create networks of “friends” that share information, both personal and publicly available. Marketers find the platform a valuable tool for learning customer preferences, making connections and generating a buzz about products or services that they believe may be of interest to particular Facebook users.

The FTC acknowledges that these platforms are a valuable network for customer service purposes, but is concerned about the privacy issues that they raise. Specifically, these Web sites expose consumers to third-party advertisers who are trying to gauge users’ interests and create customer profiles to make targeted marketing easier. The FTC is concerned that consumers are unaware of this profiling.

The FTC’s announcement also comes on the heels of new marketing initiatives implemented by Facebook. The social networking site recently implemented changes allowing third parties to access its users’ data unless they “opted-out” of the sharing. It also recently partnered with close to 75 companies, including The Washington Post and CNN, to allow users to take their Facebook “friend” networks to these sites. Privacy advocates are questioning some of these changes and asking for Facebook to take better steps to inform its users of its practices and give users a clearer choice about with whom their data is shared.

Four U.S. senators have voiced these concerns in a letter to the CEO of Facebook, Mark Zuckerberg. In their letter, Senators Schumer, D-N.Y., Franken, D-Minn., Bennet, D-Colo., and Begich, D-Ark., expressed their concerns about the changes Facebook made to its privacy policy that make more user information publicly available, permit third parties to store users' information indefinitely, and allow for Facebook technology to be integrated with other Web sites. In the letter, the Senators also asked the FTC to issue rules or guidance in this area.

The concerns of these privacy advocates do not lie solely with Facebook, however. These groups are also concerned about other technical initiatives, such as Foursquare, which allows web sites to track users’ location and spending activity through mobile phones. Again, these practices, while certainly valuable to marketers and perhaps consumers, seem to blur the line between one’s own personal space and the space occupied by third party marketers. As a result, there is an argument that a person’s expectation of privacy is not predictable.

The FTC hopes to clarify this issue for both marketers and consumers by developing guidelines to govern the privacy practices of social networking platforms, as well as the practices of search engines and new technology. Each of these platforms currently allow for somewhat extensive targeted marketing, based on consumer preferences, and it appears that the FTC intends to set parameters for these practices in attempt to clarify the lines between the consumer and marketers.

Arent Fox is tracking the FTC’s announcement and will report on the FTC’s guidelines, once announced. For more information, please contact Anthony Lupo or Sarah Bruno.

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Sarah L. Bruno
bruno.sarah@arentfox.com
202.775.5760