Facebook Defangs Beacon to Appease Privacy-Wary Users

Since Facebook introduced its Beacon program earlier this month, the data sharing initiative has met with mounting opposition from users, 55,000 of whom have joined a MoveOn group protesting the initiative.

In response, Facebook has now changed the way the program is set up to give users more control over which of their online activities are visible to their friends. The new approach somewhat reduces Beacon’s potency for Facebook partners like Fandango, Overstock.com and eBay, which in theory will experience fewer referral-based visits. But it preserves the essential structure of the program.

“We recognize that users need to clearly understand Beacon before they first have a story published, and we will continue to refine this approach to give users choice,” the company said in a statement. A story refers to an action taken on a partner site which is then placed into the news feeds of their friends.

Under the Beacon initiative, Facebook has deals with some 60 Web sites and services. Those companies share behavioral and transactional information with Facebook in exchange for having those transactions published into users’ news feeds, which they see as word of mouth marketing for their Web sites.

With the new changes, users must now give express permission within a new notification on the site before an action from a participating site is first displayed to their network of friends. If users take no action, the notification will hide without a “story” being published. The next time an individual interacts with a Beacon site, all outstanding notifications will reappear on the individual’s news feed page. This will continue until a user clicks either “remove” or “approve.” Facebook had earlier taken steps to ensure the notifications on third party sites are more clearly and rapidly displayed.

The new notifications on Facebook will look like this:

Facebook’s Beacon partners have differed in their responses to the outcry. While most appear to have changed nothing in the week since the MoveOn group was created, Overstock.com recently withdrew from the program, concerned that consumers had unwittingly broadcasted their purchases to friends. The company hasn’t yet said whether it will rejoin in the wake of Facebook’s capitulation.

“We love the idea that they can tell others about the purchases, but we want to make sure that they only do it when they intend to do it,” an Overstock spokesperson said this morning.

Privacy groups have also had mixed responses to the news. MoveOn.org, which initiated the Facebook group and petition called the shift “a huge step in the right direction.” But Jeff Chester, executive director for the Center for Digital Democracy, suggested the move doesn’t go far enough and said the FTC and global regulatory bodies must address the company’s privacy practices.

“The Beacon fix still permits Facebook to collect, store, analyze, and potentially use a member’s purchasing data,” Chester said.

For its part, Facebook has pointed out that compared to many other offline and online programs that track consumer shopping behavior, what it offers is relatively transparent. “Some feel that what you don’t know doesn’t hurt you, but that’s not how we see things,” a company representative told ClickZ this morning.

Some have questioned MoveOn’s motives for taking on Facebook’s privacy practices. The company, which has historically focused on left-wing political issues, has only a brief history of Internet-related advocacy with a Net Neutrality campaign introduced earlier this year. The leap into privacy may have an ulterior motive: to drive sign-ups and expand its donor base, some say.

“There’s no other reason for MoveOn to get involved in this,” pointed out Ian Schafer, CEO of agency Deep Focus and a ClickZ columnist. He said the organization is trying to “hop on a bandwagon of something people feel very strongly about. That’s something MoveOn has done a very good job with.”

Deep Focus has conducted numerous campaigns in social media environments, including on Facebook.

Schafer added he believes it’s in Facebook’s nature to introduce features aggressively and on a large scale, then to gauge user reaction before introducing changes.

“What they learned was that if you put something out there, people complain about it, you fix it and then people embrace it,” he said. “You listen to your audience. If you solve or address their issues, people will know you’re listening. That’s what’s going on here, and I don’t think that’s a bad thing.