Facebook Follow-up: FTC complaints, lawsuits & horrific charts–oh my!

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———- Forwarded message ———-
From: Jason Calacanis
Date: Fri, Dec 18, 2009 at 10:58 AM
Subject: Facebook Follow-up: FTC complaints, lawsuits & horrific charts–oh my!
To: jason@binhost.com

Title: Facebook Follow-up: FTC complaints, lawsuits & horrific charts–oh my!
Location: CalaCompound, Brentwood, CA
Date/Time: December, 18th 2009 11:00AM
Subscribers: 18,719
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I’ve had a crushingly busy week with the new baby, a Mahalo board
meeting and preparing for the first Open Angel Forum event in January.
I managed to squeeze out my Facebook missive on Sunday and that, as
you might expect, led to a flurry of emails and phone calls–some from
Facebook employees.

I thought I would give you a quick update based on your color
commentary and some rough statistics based on analyzing about 70 or so
of your emails. Now, you guys are the canaries in the coal mine;
you’re cutting edge, smart and good-looking if you subscribe to
Jason’s List. You’re a maven, connector and good dinner company. So,
these stats are very, very biased to the technology elite side. Add to
the bias the fact that the folks who are most charged up are the most
likely to hit the reply key to an email. Finally, some folks are
trying to curry favor with me for an angel investment or a slot on
“This Week in Startups,” and as such have no objectivity.

… but who cares? Stats are fun!

Before we get to charts a breaking news note:

Breaking news from WSJ: “Ten privacy organizations filed a complaint
against Facebook Inc. to the Federal Trade Commission Thursday,
arguing that recent changes to the social-networking company’s privacy
policies and settings violate federal laws.” http://bit.ly/68H8j1

Here are the basic results with charts:

1. Do you trust Facebook with your information?
The graph: http://www.bit.ly/facebookquestion1

Only 4 out of 71 of you said yes, you trust Facebook–about 5%.

That should be a wake up call to the folks at Facebook:
opinion-leading technologists don’t trust you. I’d love to see a
proper study done asking what percentage of folks trust Facebook vs.
Google, Twitter, Yahoo and Microsoft. I’m fairly certain folks would
trust Facebook least–but who knows? 52 said no outright–you don’t
trust them. A savvy 15 of you said that yes, you trust them, but with
the condition that you don’t share important information on Facebook.
That to me means that you don’t trust Facebook, or perhaps anyone,
with your important personal data.

Bottom line: most of you don’t trust Facebook due to a never-ending
timeline of privacy blunders. That being said, you guys probably don’t
trust many companies, right?

Color commentary from you guys:

a) “I allow Facebook to use quite a bit of my information. It’s the
same info that’s readily available just about everywhere else. What I
don’t want people to know, I don’t put on the Internet anywhere. It’s
not a matter of trust. It’s simple self-preservation.”

b) “I use Facebook as a marketing tool and assume that anything I post
is owned by facebook 🙂 So clearly I do not trust them.  The average
user trusts, they tend to visit the site everyday.”

c) “I know how the Internet works, if I put anything online its going
to run through systems. There are three types of information that I
like to think about online – first is my ‘identity’ this is social
security, bank information, etc. Second is my persona – this is the
facade I create when dripping tidbits of information online – anyone
that searches for me online can create a imagined personality that I
have personally created. And third is “ME” this is the unfiltered
information that doesn’t get posted online and never will.”

d) “Yes. I’m a big boy, if I’m worried, I’m not going to post, any
differently than I would with Twitter. ”

2. Is Facebook clueless, unethical or unlucky?
The graph: http://bit.ly/facebookquestion2

Two thirds of you thought they were unethical, and one third felt they
were clueless. (We allowed folks to vote on more than one answer in
this one). Only a handful of you felt they were unlucky. Some of you
felt they were “other,” with “other” ranging from delusional to

Bottom line: The reason most of you guys don’t trust Facebook is
because you think they are inherently unethical, and at times
clueless. I have to say, I think that there is a fourth option I
should have included: delusional. After discussions with Facebook
employees, I realize that they actually think they have done more for
privacy than any other company. They have actually convinced
themselves that, because they’ve built the best feature set for
privacy options, their sneaky behavior should be forgiven. Luckily, as
an industry, we have pundits, tweeters and lawsuits to throw a little
cold water on the heads of the super-smart folks at Facebook who have
talked themselves into this absurd position.

Color commentary from you guys:

a) “Not clueless clearly as they are obsessed with twitter. Unethical?
not really, people don’t pay a cent to use the Facebook. Though they
are clearly deceitful as I read some stat last week that mentioned
that Imagine the tsunami of information about to hit Google.”

b) “Unethical they just want to win no matter how. Its simple they
will follow Microsofts example and in 30 years or so when he is bored
and hated by 90pc of web users MZ will donate 300 billion and the US
will finally have free healthcare for everyone. In 2300 jean paul the
5th will then decide to make him a saint. (Sad part is I’m half

c) “Facebook is none of the above. I think they are quite
smart…probably too smart for their own good.  They know they need
this and they know it is against the very essence of their service,
but they think the can pull a fast one on their users. Most people
will not even realize it is public or not care. They probably guess
this will fade away like all their other controversial moves. I think
their wrong.

d) ” I don’t think Facebook is clueless, unethical, or just unlucky. I
think it’s actually a combination of all three. They were clueless
that their unethical decision would generate press. This was a move
that was easy to see coming after everything else they’ve done to copy

e) “I give them the benefit of the doubt and hope that they’re good
intentioned, but with faulty execution. I’m sure when this wast
pitched, it wasn’t like, “lets expose all our users’ private data to
the internet” but like, lets make it easier to access or find users,
groups, etc. etc. from “outside” of facebook. (which leads to more
clicks to facebook) especially since facebook search sucks. ” (from a

f) “In my opinion, the regularity with which Facebook keeps making
these kinds of blunders lends me to believe that they are unethical.
The alternative is that they are massively incompetent, which seems
less likely.”

3. Do you think there will be legal action against Facebook?
The graph: http://bit.ly/facebookquestion3

Coin toss! You guys could see this going either way, though the folks
who said “yes” are winning “the

race.” Complaints are already coming
in to the FTC, and you can be sure the class action lawsuits will be
filed in the coming weeks.

Bottom line: Facebook has taken a Microsoft circa 2000 and Google Book
Scanning approach to their product development.  “We’re doing what we
want and if you really don’t like it the best way to communicate that
to us is a with a lawsuit.” That is sad. Facebook’s benchmark should
be, “We care about our users and respect the opinion leaders in the
industry enough that we’re going to commit to an open dialogue with
them in advance of these executions.” Of course, I think that half of
the Facebook team is now taking that position. In fact, I know there
is a change coming in Facebook’s approach. The “adults” at the company
must now be thinking “screwing with hot-button issues like privacy is
not worth side-tracking the IPO.”  That’s a good vote for capitalism:
the people about to get rich off of Facebook’s IPO are incentivized to
resolve issues like this in order to protect their own personal
interests. I love capitalism! The system works, even if it is really
ugly at times. The fact is, you guys tweeting and blogging about this
issue alongside the “pundits” and NGOs like the EFF (who championed
it) makes it impossible for Facebook to keep doing the same thing….

Color commentary from you guys:

a) “If enough momentum gains on this, which I don’t think will happen,
then of course there will be litigations.”
b) “If it can be proven that users were actually tricked into giving
away their data, there will be lawsuits. I’m not sure that will
happen, but the wording on the message was awfully deceptive.”
c) “There will be a class suite.”
d) “I don’t think that their latest shenanigans will change much, but
it does not help the overall atmosphere. In other words I do not see
this as the straw that broke the camels back, but we are getting close
to that point. It may not be Facebook that gets the regulators
involved, but they will have been a big part of making that happen (I
see this as an unfortunate eventuality, as irresponsible behavior is
ultimately rewarded financially).  It simply will not cost them enough
and conversely companies like Twitter are simply not rewarded enough.”

all the best,



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Sent by Jason McCabe Calacanis to his friends.

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Upcoming Events:

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My angel investments/board positions:
1. www.savings.com – on the board
2. www.bayridgeprep.com – on the board
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4. www.challengepost.com – angel investor
5. www.gowalla.com – angel investor
6. Will announce fourth angel investment in January
7. Will announce fifth angel investment in January

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