Now that Facebook has settled with the Federal Trade Commission over its failure to keep its privacy promises -- and Mark Zuckerberg has admitted that Facebook "made a bunch of mistakes," we thought it would be worth looking back at an editorial LAUNCH founder Jason Calacanis wrote two years ago about Facebook's fishy approach to privacy. The original is here.

UPDATED/RELATED (9:30AM December 14th): 1. Excellent post from Dan Gillmor on why he deleted his Facebook page, which supports my thesis below. 2. The EFF’s comments on Facebook’s horrific behavior is great supporting evidence. These two articles appeared DAYS before my rambling piece below. 3. Facebook reached out and asked me to do a call with them. This call will occur this afternoon. Please post updates below (or link to this story so I can link back).

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Title: Is Facebook unethical, clueless or unlucky?
Location: CalaCompound, Brentwood, CA
Date/Time: December, 13th 2009 11:20AM
Subscribers: 18,463
Republishing: Looking for someone to donate to charity for web rights to newsletter: http://bit.ly/8Vql8G

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Facebook proved again this week that they are either the most unethical or clueless internet company in the world. An amazing accomplishment since Facebook is also one of the most promising, and certainly fastest growing, internet companies of all time. Perhaps I’m being hyperbolic (who me?), or maybe they are a little of both, but the fact remains they screw up on important issues almost as if it’s a “best practice” to do so.

In case you missed it, when you logged into Facebook this week you were road blocked with a popup explaining that they “we’re making some changes to give you more control.” Sounds good, and like most users looking to quickly get into a website or application, I simply clicked through the message. How important could it be?

When faced with a TOS (Terms of Service) or license the world has been trained to hit the word “agree,” and click, click, click until they get to the actual website or software they were trying to get to in the first place.

Everyone in the industry knows this, and certainly a company built off of studying social behavior like Facebook would. Since the ToS is considered a formality, it is up to technology companies–in fact our industry–to behave. If we don’t behave well then we are going to get regulated by clueless politicians and policy makers. That would suck for everyone.

So What Happens When you Clickthrough?

In this case, if you simply click through the windows you’ve exposed all of your private Facebook information, including comments, friends, pictures and status updates, to “everyone.” In other words clicking through changes everything in Facebook terms–unlike every other license or update screen you’ve experienced in your life.

I’m sorry, what the frack just happened? I turned over my friend list, photos and status updates to everyone in the world? Why on earth would anyone do that with their Facebook page?

The entire purpose of Facebook since inception has been to share your information with a small group of people in your private network. Everyone knows that and everyone expects that. In fact, Facebook’s success is largely based on the face that people feel safe putting their private information on Facebook.

When you do get to the second page a series of confusing radio buttons default–yes defaults–to giving everyone access to your social graph. Wow. I’ve been using the internet since before images were supported.
I’ve been a member of every social network since Six Degrees and Ryze, almost a decade before Facebook became available to the public, and I was confused by their settings page. An average user, certainly, has no idea what is going on by these changes.

So why is Facebook trying to trick their users?

Simple: search results.

Facebook is trying to dupe hundreds of millions of users they’ve spent years attracting into exposing their data for Facebook’s personal gain: pageviews. Yes, Facebook is tricking us into exposing all our items so that those personal items get indexed in search engines–including Facebook’s–in order to drive more traffic to Facebook.

So why is this wrong?

While there is nothing wrong with having a service that is “public by default,” it is highly unethical to flip your users over to public in a such a deceitful way

Twitter is, of course, public by default, and we all know that Facebook is obsessed with Twitter innovations including their short status updates, their API and most of all, their “open by default” strategy.

Facebook has had a couple of innovations in their history, like their application layer and news feed (which is now gone), but for the past couple of years they’ve given up on innovation and focused on stealing ideas from Twitter and out-executing them, while not caring about user rights. This is challenging for Twitter, which is run by the highly ethical Evan Williams and Biz Stone. In fact, those two guys are massively conservative when it comes to their user base.

Facebook continues their non-stop copying of Twitter, and even after the absurdly stupid “Facebook Beacon” debacle, they continue to try and sneak unethical behavior past the masses–and the industry.

The result? They’re winning and winning big!

It is so depressing when one of our leading companies bases their ethics on “will we get caught?” and perhaps more precisely: “if we do get caught will it cost us anything in relation to the money we’ll make when we go public?”

The Issue Facebook is creating for all Internet companies

Another problem Facebook is creating with their reckless behavior is that they are simultaneously making users distrust the internet and bringing the attention of regulators.

As an industry we should police ourselves and do everything we can to create trust with users.

It would be great if the “adults” sitting around Zuckerberg’s cube would explain to the Golden Child that just because he’s on the Forbes billionaires list and he generates a mob of sycophants around him at the TED conference, that doesn’t mean he gets a free pass to bring the heat down on all of us.

Behave yourself dude!

How would you do it better?

If Facebook was more concerned with ethics than world domination, they would simply post a popup that said something like:

“Dear Facebook Members,

Good news, we’ve now added the option to share your content with everyone! Be sure to check out this new feature here and be sure to consider if you want to expose your content to the world before changing your settings!”

Of course, that would result in 1% of users turning their service to “everyone” (i.e. public) a month. It would take years to convert a meaningful amount of users and their personal data into revenue generating public objects. With Facebook’s IPO–the one that will save Silicon Valley–around the corner, there is simply nothing we can do.

Facebook’s IPO and revenue growth trumps user’s rights, right?

Growth at all costs!

Long live the Golden Child!

Ticker: FCBK FTW!

Can I still get a friends and family allotment?

#fail

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