Consumer Groups Urge Facebook To Back Off On New Privacy Changes

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Facebook investors bought more shares of the stock today as the new ‘privacy’ policy’s about to take effect.

According to the LA Times, shares rose 8% to $25.94…mainly because investors know the profit that’s in the shady business of selling your personal information.

Two consumer watchdogs are urging Facebook founder and Chief Executive Mark Zuckerberg to back off proposed changes to its policies that they say would curb the rights of its 1 billion-plus users and make more personal information available to advertisers without users’ explicit consent in violation of a privacy settlement with the Federal Trade Commission.

In a letter sent to Zuckerberg on Monday, the groups asked Facebook to be “responsive to the rights of Facebook users to control their personal information and to participate in the governance of Facebook.”

Facebook informed users last week that it planned to do away with its system that allows users to vote on –- and strike down — changes to its policies and terms of services if the policy change receives more than 7,000 comments and more than 30% of users take part in the vote. In addition, Facebook said it would no longer let users control who could message them on the service, and would instead set up new filters to help users manage their messages.

Most controversial to privacy watchdogs: Facebook’s plans to begin sharing users’ data between its own services and affiliates, most notably Instagram, which it bought earlier this year for about $715 million. Google was on the receiving end of a similar reaction last January when it said it would combine users’ personal information from all of its services including search, email, the Google+ social network and video-sharing site YouTube. Regulators and privacy groups warned at the time that the policy change invaded users’ privacy and put them at greater risk for hackers and identity thieves.

“As our company grows, we acquire businesses that become a legal part of our organization. Those companies sometimes operate as affiliates. We wanted to clarify that we will share information with our affiliates and vice versa, both to help improve our services and theirs, and to take advantage of storage efficiencies,” Facebook spokesman Andrew Noyes said in an emailed statement.

“The settlement prohibits Facebook from misrepresenting the extent to which it maintains the privacy or security of covered information. Additionally, prior to any sharing of users’ personal information with a third party, Facebook must make a clear and prominent disclosure and obtain the affirmative express consent of its users,” Rotenberg and Chester wrote in Monday’s letter to Zuckerberg.

The changes could help Facebook — after a rocky debut as a publicly traded company — win back favor with investors. The giant social network is looking to reverse a sharp slowdown in revenue growth. The stock has declined more than 30% since its initial public stock offering in May.

Facebook, Google, and other companies are under greater scrutiny for how they handle personal information. Consumers are handing over more and more personal information, yet privacy watchdogs say they have less and less say over what companies do with it.

Facebook downplayed the significance of eliminating its 4-year-old voting system, saying it has simply outgrown it. Instead of having users cast a ballot, Facebook said it would rely on other means of giving them a voice in changes to the service such as an “Ask the Chief Privacy Officer” question-and-answer forum on its website.

Privacy groups said scrapping the voting system “raises questions about Facebook’s willingness to take seriously the participation of Facebook users.”

“We hope Mark Zuckerberg will do the right thing. The proposed change to the privacy policy is not fair to users. It’s their data, not Facebook’s,” Rotenberg said.

Facebook has notified users about the proposed policy changes and provided a seven-day window for public comments. Comments have already exceeded the 7,000 needed to trigger a vote.

The vote is expected to begin on Thursday. Facebook investors were voting with their portfolios on Monday. Facebook shares hit their highest price in four months after analysts said investors had underestimated the company’s growth potential.