NY AG targets Facebook on privacy issues

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New York State Attorney General Andrew Cuomo and his office has subpoenaed social networking site Facebook as part of an investigation into the site's safety and privacy measures, furthering the question of whether or not the personal profiles on the site should remain private.

His office is investigating Facebook over representations the company makes about safety measures on its Web site. Facebook did not return calls in time for deadline.

In a letter accompanying a subpoena for documents, Cuomo warned the company that a preliminary review conducted by his office revealed significant defects in the site's safety controls and the company's response to complaints.

"My office is concerned that Facebook's promise of a safe Web site is not consistent with its performance in policing its site and responding to complaints," Cuomo said in a statement.

"Parents have a right to know what their children will encounter on a Web site that is aggressively marketed as safe," the statement read.

Investigators from Cuomo's office posing as underage users on Facebook found that they were repeatedly solicited by adult sexual predators and could easily access pornographic images and videos.

Cuomo's office claims that Facebook often did not respond or was slow to respond to complaints lodged by the other investigators who posed as parents of the underage users requesting that the site take action.

The attorney general's investigation comes as one more in a chain of several events throwing into question the site's protection and privacy policies.

As a result of the media attention surrounding this investigation, some social networking consumers have voiced concerned about who has access to information meant only to be shared with designated Facebook friends.

Michael Hussey, founder/CEO of PeekYou.com, a search engine that specializes in finding people, disagrees with Cuomo's attack on Facebook, believing it to be a headline grabber, but does agree that there is a benefit to having a private account on the social network.

"If Facebook starts opening up then they will just become MySpace all over again," he said. "Consumers like Facebook because it is a more private environment and they can be more open about themselves on it. The closer they become like MySpace, the worse off they are in the long run. They may see more traffic at first, but in the long term it will have a lot more fake profiles and it will become more spammy."

Still Hussey doesn't think that they are in violation of consumer trust.

"It's probably not necessarily a good business idea, but as long as they offer users an opportunity to opt-out, then it is okay," he said.

Facebook buy-out rumors

Facebook, a start-up run by founder/CEO Mark E. Zuckerberg, a 23-year old Harvard graduate who designed the social network while in school, has been growing rapidly over the last year. There has been speculation that the social network could sell shares to large investors such as Google or Microsoft.

YouTube. Yahoo and Viacom have reportedly expressed interest in Facebook in the past. Last year media mogul Rupert Murdoch's News Corp. acquired social networking giant MySpace for $580 million and Google acquired online video site YouTube for $1.65 billion.

The New York Times reported rumors of Microsoft and Google are considering investing in the site which could value the site at more than $10 billion.

According to the story, Microsoft may be considering an investment of $300 million to $500 million for a 5 percent stake of Facebook.

A new face for advertisers

While there is some concern for consumers, there is also a lot of potential for marketers to reach consumers in a public Facebook offering. As Facebook has opened up its community network, different software is coming out for marketers to send targeted ads to users.

Ad channel Chitika's new platform eMiniMalls, lets application developers integrate ad units within Facebook.

"We are excited about Facebook opening up its API," said Venkat Kolluri, CEO of Chitika. "This has opened up the floodgates for new applications to be designed."

Kolluri would not comment on the Cuomo investigation, but did say, "I am a big believer in openness and in giving all parties a chance to express themselves."

As these new applications become available and the Facebook network becomes more open, some marketers maintain the debate is about policy rather than privacy.

"We went through the privacy wars back in 1999, and it's hard to believe that all of a sudden Facebook is going to come along and start violating people's privacy," said Dave Coffey, the director of global media services at interactive marketing firm Sapient.

"We're not quite sure what all of the fuss is about. The real concern is whether they are violating their terms of use, not whether behavioral-targeted advertising is okay," Coffey said.

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