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Facebook backpedals from new ad system

Saying it went too far in its pursuit of profit, the popular Internet hangout is allowing its users to permanently turn off its "Beacon" advertising program.
/ Source: The Associated Press

Saying it went too far in its pursuit of profit, the popular Internet hangout Facebook Inc. is allowing its 55 million users to permanently turn off its "Beacon" advertising program, which tracks their activities at other Web sites.

The privacy control, announced in a Wednesday apology by Facebook founder Mark Zuckerberg, will likely decrease participation in a month-old program that the Palo Alto-based startup had hailed as an advertising breakthrough.

Facebook users protested Beacon as a flagrant violation of privacy. The program enables Facebook to track their purchases and other actions at dozens of Web sites and then broadcast the data within its social network as items on other users' "news feeds."

"We've made a lot of mistakes building this feature, but we've made even more with how we've handled them," Zuckerberg wrote on Facebook's blog. "We simply did a bad job with this release, and I apologize for it."

Empowering to users block Beacon entirely "is big step in the right direction, and we hope it begins an industrywide trend that puts the basic rights of Internet users ahead of the wish lists of corporate advertisers," said Adam Green, a spokesman for

MoveOn, an advocacy group, organized a petition against Beacon that more than 65,000 Facebook users signed.

Critics remain worried that Facebook and other popular Web sites will deploy increasingly sophisticated technology to shadow Web surfer's activities in an attempt to tailor advertising more and more specifically.

"The move to allow users to turn Beacon off entirely may restore a small measure of control to Facebook's members, but it is by no means an adequate safeguard for ensuring privacy protection on this and other social networking platforms," said Kathryn Montgomery, a professor at American University.

Jeff Chester, executive director of the Center for Digital Democracy, promised to continue to press U.S. and European regulators to examine Facebook's "significant privacy problem."

Matthew Helfgott, a college student user who was irritated last month when Beacon alerted him about a gift his girlfriend had bought him, was more forgiving.

"I can understand why (Facebook) wanted a program like this, but I didn't like the way they went behind everyone's backs doing it," said Helfgott, 20. "I just hope they learned from their mistakes and do a better job telling their users about important changes like this in the future."

Although outrage over Beacon attracted widespread attention, it apparently didn't drive people away from Facebook — the Internet's second largest social network behind News Corp.'s

In the week Facebook unveiled Beacon, its Web site attracted 20.2 million U.S. visitors, according to comScore Media Metrix. More than 22 million came each of the next two weeks and 24.6 million people visited Facebook the week ending Nov. 25.

Facebook hoped Beacon's marketing feeds would be seen as "trusted referrals" among friends, helping to drive more sales to the sites using the system and eventually generate more ad revenue as the 3-year-old company tries to fulfill lofty expectations.

But thousands of users lambasted the referrals as a betrayal of trust.

"I'm not proud of the way we've handled this situation and I know we can do better," Zuckerberg wrote.

It's the second time in 15 months that Zuckerberg, 23, has fended off a privacy-rights backlash. Last year, after Facebook introduced a tool to its news feed function that tracked changes to users' profiles, it was swamped with complaints. In response, it added a way to turn off the feature.

Facebook tried to quell the rebellion against Beacon by revising it so the data it gathered was shared only when users opted in. Previously, users had to opt out, but many said they never saw the opt-out notices that appeared for 20 seconds and then vanished.

But opposition remained among some users and privacy rights activists because Beacon continued to gather information about users' behavior even when they weren't logged into Facebook.

Now, when users turn off Beacon, Facebook won't store anything about their activity on other sites, "even when partners send them to Facebook," Zuckerberg pledged Wednesday.

Privately held Facebook is believed to generate more than $150 million in annual revenue after just three years in business, but it's under pressure to accelerate its growth.

Microsoft Corp. raised the stakes last month by paying $240 million for a 1.6 percent stake. The investment implied a $15 billion value for Facebook — an assessment that will require the company to become a lot more profitable in the next few years.

( is a Microsoft-NBC Universal joint venture.)

Hong Kong billionaire Li Ka-shing recently provided Facebook with another vote of confidence by investing $60 million in return for a 0.4 percent stake.