You changed my Facebook?

Have you heard the latest uproar about Facebook?  It appears that another backlash in currently in progress about Facebook’s privacy policies.

According to areport in USA Today, Facebook has rolled out a new feature that allows other websites to access portions of your Facebook page without your consent.  Facebook users are crying foul.  In many ways it is a replay of a previous Facebook privacy flap.

I’ve been asked from some irate friends whether Facebook can really do this to them.  From a purely legal perspective, my answer is yes.  From the business perspective, my answer is maybe.

Business contracts are bilateral.  They typically require what the law calls a “meeting of the minds” in order to be legally binding.  The goal of contracts is to nail down mutual expectations and establish the rules of the game.  Good contracts also require any changes to be memorialized in writing.  Again, the purpose is to provide a clear road map and make sure everyone “gets” it. 

Please note that contract law does not require changes to the deal to be spelled out in writing and signed by everyone.  It’s something good contracts do to make it simpler and easier to identify everyone’s expectations and avoid misunderstandings. 

Policies, in contrast to contracts, are unilateral.  What that means for you is that they can be changed by the company at any time without your permission.  You can opt out by “unfriending” the company or you can complain.  If the noise level from the complainers is loud enough or a critical mass of people decides to opt-out the company might rethink its position and change it.  That’s what happened the last time Facebook messed with its privacy policies; but, there is no guarantee it will happen again.

Nonetheless, the new Facebook fiasco drives home some important lessons for social media users as well as businesses in general:

1.        Since policies are unilateral, the definition of “privacy” on a website you do not control is nothing more than a moving target anchored by trust.

2.       When a company uses someone else’s confidential, or private, information without that person’s permission you can expect uproar and a loss of trust.

3.       A loss of trust dents business reputations, particularly when the loss of trust results from a perceived conflict of interest.  In the Facebook example it could be couched as profits from marketing data over privacy. 

Pick up any major news paper and the headlines illustrate how outrageous breaches of trust result in new laws and regulations.  Cries for financial reform are being driven by the near collapse of our capital markets and what is perceived to be unbridled greed and risk taking by Wall Street firms over the economic stability of a nation.  BP’s oil well disaster in the Gulf of Mexico has already resulted in reorganization of the government agency responsible for regulating offshore drilling operations and you can be sure that more reform will follow.

New laws are created to fill the gaps whenever society feels that traditional notions of fair play and ethics are violated.  As a result it always pays to look changes to your business policy or operating procedures from the perspective of your stakeholders. Will it leave them better off?  Or worse off?

There is often a way of reconciling perceived conflicts of interest.  That’s why from a business perspective, whether Facebook can have its cake and eat it too will depend on what it does next in response to the recent change in its privacy policy.