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FTC investigates fairness of Facebook Ads platform

November 15, 2007

Facebook.com is cooperating with an investigation by the Federal Trade Commission regarding concerns the social network’s latest advertising scheme violates the privacy of its users.

U.S. Public Interest Research Group and the Center for Digital Democracy asked the FTC to expand an investigation that began last year on what the advocacy groups called “unfair and deceptive online marketing practices” by networking Web sites.

“We believe that Facebook users have not been informed about how their personal information on their profiles is now being accessed and used for commercial purposes,” said Jeff Chester, executive director of the Center for Digital Democracy. “I think users would be troubled to know that their information is being made available to the highest bidder.”

The Facebook Ads platform opened up the social network and its 54 million active users to more than 100,000 businesses last week. The ad system allows marketers to build business profile pages and equip them with pictures, music, videos and discussion boards.

When a user engages with a business’s page by purchasing products, writing reviews, becoming a “fan” of the business or other actions, those activities — paired with the user’s name and picture — could show up in the user’s mini-feed and news feed.

Facebook CEO Mark Zuckerberg introduced the ad system at the Facebook Social Advertising event Nov. 6 in New York. Eight days later, Facebook released an official statement on the investigation.

“Facebook is participating fully in the FTC’s discussions and explaining the consumer benefits of giving users more control over advertising,” the statement reads. “Facebook Ads was developed to provide users with more useful and relevant advertising.”

If the FTC allows Facebook to continue operating the system, MSU advertising professor Dave Regan said the ads will help marketers connect with youth.

“You can’t put information (about your business) in the hands of the young people you’re targeting any better than with a service like Facebook,” Regan said.

Regan said he expects Facebook users will react to the ad system in several ways.

“You’ll always have those that argue that saturating consumers with more content is a further invasion of their space,” he said.

“But you’ll also have those that say, ‘I’m bombarded by all sorts of ads already, so if it helps me find and buy a better product, then it helped me.’”

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