Facebook's Fine-Print Fiasco

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MySpace removes from its site all content associated with any user who leaves. "Once you terminate, they say their license terminates," says Howard Susser, partner of the intellectual property group in the Boston-based law firm Burns & Levinson. YouTube's terms of service states that the license terminates after a "commercially reasonable time." Blogger Amanda French did a side-by-side comparison of several sites' terms of service and came to the conclusion that Facebook users had cause to be aggravated. "Facebook's claims to your content are extraordinarily grabby and arrogant," she writes.

So what would Facebook want with records of 25 Random Things About you or photos of your family vacation at the lake? It's possible the company didn't even know yet, Ardia says. But the site was adopting a legal tactic that predates even the Internet: "It's normally the best practice for a lawyer to recommend to their clients to take for themselves the broadest possible set of rights," he says.

And at a time when Facebook has yet to determine how to make money from the online activities of its more than 175 million users, it wants to retain access to a trove of data that could be used for marketing and other efforts to turn a profit. "It's not about them owning your content," says Ben Kunz, director of strategic planning for digital media consultancy Mediassociates. "They don't want to own your baby pictures. The most valuable thing they're creating is information about potential customers" that could be sold to marketers, he notes.

Beware the User Backlash

Whatever the purpose for the changes, Facebook didn't do a good enough job communicating the changes to the terms of service, privacy experts say. Rather than asking users to agree to the new terms, or even sending an e-mail alert to all users, the company added this line to its terms: "Your continued use of the Facebook Service after any such changes constitutes your acceptance of the new Terms." "That just isn't a good business practice," says Pam Dixon, executive director of the World Privacy Forum.

While numerous blogs and news outlets have picked up the story, Facebook has seen perhaps the most vocal reaction to its changes on its own site. Users created multiple Facebook groups protesting the changes, including one, "People Against the new Terms of Service (TOS)," that had more than 38,000 members at the time of this story's publication.

In November 2007, similar user protests caused Facebook to back down after introducing Beacon, a program to share user information with advertisers. "There are some nonlegal limitations that Facebook has to deal with," says Harvard's Ardia. "It also faces limitations that come from meeting the needs and expectations of their users."

"The social networking sites are at a real crossroads here: They can either differentiate themselves based on fair treatment of their customers" says privacy expert Dixon. "Or they can swim to the bottom and make a grab for all these rights."

Douglas MacMillan is a staff writer for BusinessWeek in New York.