Facebook May Revamp Beacon

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Janzer added that Facebook plans to make the sites that work with Beacon more visible and provide more information about how Beacon works. "We're sorry if we spoiled some of your holiday gift-giving plans."

The promise follows a Nov. 27 tweak to the system designed to ensure that users were clearly notified, both on Facebook and on partner sites, that news of an off-Facebook activity would be sent to friends, unless the member explicitly declined to send that information. Those earlier assurances did little, however, to appease upset users, many of whom don't want Facebook to share information on their Web activity for advertising purposes—even if it's shared with people they’ve identified as friends. "I feel duped," says Frank Kruller, a Facebook member for seven months. "If I wanted to share something with my friends I'm pretty sure I could tell them myself."

Threatened mutiny

Any move that weakens Beacon's appeal to advertisers leaves Facebook under pressure to find other ways to lure marketers and justify the lofty $15 billion valuation bestowed by Microsoft (MSFT) in October, when it purchased a 1.6% stake for $240 million (BusinessWeek.com, 10/25/07). Users of social networks are typically less responsive to standard ad formats, such as the posterlike banner ads commonly seen on the Web, than to newer, more interactive or personalized advertisements. Some marketers say that when they place banner ads on Facebook, the so-called click-through rate, a measure of user responsiveness, is one-fifth the rate for the larger Web.

But many Facebook users insist that they, not marketers, should set the terms of how, and how much of, their information is shared for advertising purposes. Some threatened to move to other social networks or start their own blogs if Facebook takes that decision out of their hands. "I will set up my own blog," says Flaschen. "It is a little less convenient, but if [Facebook] can't understand the privacy implications of what they are doing then it's not worth it."

Adam Green, a spokesman for MoveOn, hopes other social networks that have their own Facebook-like feeds about users' actions—namely, News Corp.'s (NWS) MySpace—take heed of such warnings. "We hope that this is opening a lot of people's eyes to the very real privacy concerns on the Internet," says Green. "The privacy interests of Internet users should get put before the wish list of corporate advertisers."

Holahan is a writer for BusinessWeek.com in New York .