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Facebook and Users: Peace at Last?

Posted by: Douglas Macmillan on April 23, 2009

Weeks after the dust settled in the controversy over Facebook’s terms of service, the episode is getting a neat and happy ending. Or is it?

In the first instance of a big company letting its customers vote on a legal contract, members of the social networking site elected to adopt the new, revised document over the old one, nearly 3 to 1. Barring any irregularities found in an audit that’s being conducted, Facebook plans to adopt those new terms of service in the coming days.

Around 650,000 users showed up to vote, spurred on by reminders Facebook placed across the top of its home page and the viral spread of members notifying one another in their “news feeds” that they had cast a ballot. The company has stated that the vote would be binding only if 30% of active users on the site participated, which would amount to around 60 million people. “We wanted to make sure if a users were going to be choosing our next course of action that a significant number would be involved,” says Facebook spokesman Barry Schnitt. Still, he says the company stands adequately convinced that the new contract is what its users prefer.

“What they’re doing is unprecedented,” says Julius Harper, the Los Angeles-based video game designer who helped rally tens of thousands of fellow Facebook users in a revolt against changes the company made to its terms of service in early February. In a direct response to the outpouring of comments from angered and confused members on Harper’s group and others like it, the site agreed to revise its contract again based on their suggestions, and put it to the vote. “None of us imagined we would be here in February when we started out the protest groups. A large company actually sat down and said to its users ‘We’re going work with you to help you govern your intellectual property on our site,’” Harper says.

Going forward, Facebook says further changes to its terms of service may be put to a vote if enough users speak out on a particular issue. If they stick by this philosophy, there’s at least one obvious vote waiting to happen: Millions of users still oppose the site’s new look, rolled out in March, as evidenced by groups like “Petition Against the ‘New Facebook,’”“Millions Against Facebook’s New Layout & Terms of Service,” and “We Hate The New Facebook, So Stop Changing It!!!”

While Facebook’s design is the hot issue of the moment, I’m still not convinced that the company and its users are on the same page about its terms of service blowup. Earlier this month, when COO Sheryl Sandberg sat down for an interview with BusinessWeek editor-in-chief Stephen Adler, she pronounced that there was never a “substantive change” to the contract in the first place – suggesting that the company only negotiated with its users to appease them, not because it did anything wrong.

Harper is frustrated with this response as well. “If she doesn’t understand why the changes were such a big deal to people, then who’s to say they’re not going to make some other “non-substantive” change that tweaks everyone off next month?” he asks.

At least now if Facebook manages to “tweak” off 60 million people who are ready to take action, they can put it to a binding vote.

Update: Last night, the company’s general counsel Ted Ullyot posted on the Facebook blog that the new terms will be adopted after the auditing process, though he says they will take effect in “weeks,” not days. In the future, he says the site may lower its 30% threshold for binding votes given this outcome. Also, he points to Julius Harper as someone who is happy with this outcome - which he generally is, but clearly also has some reservations about whether or not Facebook learned its lesson.

Update 2: Just received a prepared statement from Marc Rotenberg, the executive director of the Electronic Privacy Information Center - the group that appeared to be heavily responsible for Facebook going reversing its changes. He says:

We are pleased with the outcome. Facebook addressed several privacy problems that EPIC had identified. We also appreciate the efforts of Julius, Anne Kathrine and others who helped organize the campaign. There will always be privacy issues with Facebook and other popular web services. The need for a comprehensive privacy framework is clear. But this week Facebook took an important step in support of user privacy, and we support the outcome.

Reader Comments

What Price Peace?

April 27, 2009 2:22 PM

The irony behind this debate is that in most cases - the more consumer's interests are taken into account, the less options a service provider has for making money. Here you have Facebook - a company without a sustainable financial model currently, having to bow to the demands of their consumers making it further unlikely they will ever have a respectable financial business model.

Facebook is only shades of AOL from the past, which beyond its membership fees had no business in business. How this is so clearly evident now, and yet people believe there is a "there" there for Facebook boggles my mind. Let me write the closing chapter for Facebook before BusinessWeek publishes it within the next two years. THERE IS NO SUSTAINABLE FINANCIAL BUSINESS MODEL FOR SOCIAL NETWORKS! End of story.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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