Are Facebook Ads Illegal
First off let me say that while I think it might be possible for Facebook to get in some trouble in a few states for misappropriations, it is unlikely that they would have designed a system that that would have been patently illegal. After reading their TOS, it gives them the right to use you and all of your profile information to advertise Facebook however they would like. It is unclear as to whether it gives them the right to use that information to advertise outside of Facebook. I would present that is their out. There is no indication that they will use profile information to advertise outside of Facebook, in fact there is no reason they would have to.
Think about it, the reason for advertising in Facebook at all is because you can't get to those users in any other way. Google doesn't index profile information, and Facebook didn't have an automated system for delivering ads for advertisers. So for advertisers this is a goldmine of an opportunity.
I think the current backlash is a little unjustified in several ways. The first is that Facebook somehow doesn't have the right to use the information you have given them to try to sell you stuff. The company has to make money. It was clear that they were going to try to monetize, and this is not a bad approach.
One of the issues with Web 2.0 is that everyone is spending all of their collective brain-cells trying to figure out how to be a “disruptive” force in the marketplace. Usually that entails giving services or products away for free. What has happened is that users have gotten used to getting things that should cost for free. If this doesn't change, the next revolution in the web could be expensive. I'm glad to see Facebook monetizing in an interesting way.
That people are upset about having their likeness used to advertise services that they choose to advocate is unfair. Facebook is trying to head off what I call avatar spam. It is a company setting up a profile and trying to friend everyone. Most of the time you can tell when someone is a company pretending to be a person, but not always. With this, Facebook is allowing companies an avenue to becoming a users' friend in a sandboxed way. To me its no different than driving around in a car with a bazillion logos all over it, indicating the company that made it, or wearing that Nike shirt with a huge swoosh on the front, or finally that team liquigas cycling jersey you paid $200 for. At least in Facebook's model, they are not charging you to advertise someone else's product, and you know that you are doing it.
I think what is happening at Facebook is in many ways the definition of company as a partner. You have to explicitly add a “page” to your profile. At that point, you are like an advocate for the company. Probably the most valuable advocates will get free stuff, and most advocates will get coupons, etc…
The reason companies will want to give you stuff is that it isn't enough to just use your name and your likeness. Advertisers have been doing that for centuries. The hope is that your friends will ask you about that product or company and you will give a good response.
Google is justifiably worried about this marketing model. By staying effectively out of the social networking movement, with the exception of delivering ads via adsense, they have missed this opportunity. I think it is the first true example of a mis-step we have seen from Google. Facebook represents the only clear-and-present danger to Google as a company, because they know more about their users and have come up with an even more innovative advertising system than Google. This is what prompted Microsoft to plunk down their chunk of change. This is what makes Facebook worth $15 billion.
Personally I don't advertise anything I don't want to. I have to use Windows at work, but I don't rant or rave about it. I am not necessarily a Microsoft advocate. On the other hand I use Joost and tell all my friends about it, I rave about it. I rant about Apple all the time. By ranting and raving I am saying that I care about both companies. I am engaged in a dialog with them, whether they listen or not is another story.
I enjoy Facebook, I don't love it, but it does fill some sort of need for me. I wouldn't stop using Facebook because of this, but I am sure some people will. If I were Facebook, I would allow users to pay $10 per month, or some form of micro payment to avoid being messaged by “pages,” or the new ad system, also the fee would prevent their likeness or profile information from being shared with the company. Facebook can't allow users to opt out today because they haven't proven the model. Once advertisers get comfortable with the level of targeting, they could allow the opt-out.
As far as security, no web application is secure. The illusion of security is a myth. Your Facebook page is protected by a password, that is it. Some clever phishers can easily gain access and do whatever they want. If you are worried about security, and control of your private information, don't participate in online social activities. Make sure your communication with the web is as one-sided as possible, and power off your computer when you are done using it each time. Otherwise, you are trusting a corporate entity with only one purpose, profit, to keep your information safe and secret.
On one hand, that should worry you, but on the other hand, that is what will indeed keep your information as safe as possible. If it were exposed that Facebook had major breaches of security, and that they were giving all of your information away, everyone would run away from the service like the plague and there would be no ad revenue. Facebook, like Google, must keep their customers' trust to keep their shareholders happy. It is their most important asset.
One has to remember, the advertisers are being exposed here too, it is highly possible for me to add one of their pages as a fan, and proceed to trash the product in their discussion, and on their profile, as well as on their blogs. So it is in the advertisers' best interest to not anger their “fans.”
All in all, I don't think their advertising model is illegal, and I think that all of this bad press will blow over. I do think they should come out with some type of paid opt-out in a few months to protect their revenue streams, and to protect their users, but other than that I think the new ad system is a good idea.