Will Google Buzz Fallout Hurt Page's Social Push? [News Report]

by Avinash Saxena

Newly-installed CEO Larry Page hasdecreed that “social” is Google’s future — and has tied the bonuses of all employees to the company’s success in “integrat[ing] relationships, sharing and identity across [Google’s] products.”

Google has historically struggled at social — most of the social products they’ve launched have been ignored by their users. Google Buzz got everybody’s attention, but for the wrong reasons, when the company repurposed Gmail users’ private contact lists to build a public social network. That one also caught the attention of regulators, leading to an investigation by the Federal Trade Commission. The FTC recently settled with Google, ordering it to submit to 20 years of privacy audits and to get “express affirmative consent” from Google users prior to making any changes to how and with whom it shares information previously collected.

“It’s quite a serious impediment to Google’s ability to innovate rapidly,” said NYU law professor Ira Rubinstein of the “draconian” FTC consent decree, during an event at the law school on privacy regulation. He’s particularly sensitive to the deleterious effects of government regulation as a former Microsoft associate general counsel. (The FTC is not the only regulator breathing down Google’s neck. The Justice Department has antitrust concerns, and the company agreed to submit to government monitoring in order to get its hands on a fare tracking company.)

“It’s breathtaking that Google agreed to do this across the board,” Rubinstein said. So could the settlement wreak havoc on Google’s attempt to be more social?

How do I know if I have Google Buzz?Thanks to Buzz, the FTC will be paying close attention to Google’s attempts at social

Rubinstein is not alone in his concern about the decree. There’s hand-wringing about it internally at the FTC. When it was issued, one of the FTC Commissioners issued a “consenting opinion,” which included a strong dissent when it came to the requirement that Google get opt-ins from users for any changes in how it shares user information with third parties. Commissioner Thomas Rosch, a Bush appointee to the FTC, wrote [PDF]:

Part II [Ed. note: the part of the order mandating “affirmative consent” from users for any changes Google makes] applies not just to Google’s social networking services or products, but to every single Google service or product that undergoes some “change, addition, or enhancement” (terms that are not defined in Part II) that results from the sharing of certain information.

“This will lead to a disaster a few years from now,” says James Grimmelman, as associate professor of law at NYU, who says it’s inevitable that the FTC and Google will eventually disagree on what a “change” to use of information is.

More from Rosch:

As a practical matter, this means that Google is at risk that Part II will apply across the board to every existing product or service that Google offers, including any product or service that involves the tracking and sharing of identified Google users’ browsing behavior.

The FTC has said this applies, for example, to the Android as well. That could be problematic given the firestorm of late over the information that mobile phones are handing over to apps (Apple currently faces a small army of class action lawsuits over this because of info-leaky iPhone apps).

Katie Ratte, senior attorney for the FTC’s Division of Privacy & Identity Protection, says, though, that this part of the order was drafted with Buzz in mind — and that’s the kind of reuse of data that they’re trying to prevent. “Google is free to develop new products,” she said. “We just don’t want to see information collected under one set of rules shared in a new way. That’s when Part II would kick in, requiring consent from users.”

Public nature of +1 is made promient

Ratte says the opt-in requirement is a “big deal,” and something that the FTC is expecting other companies to regard as a best practice moving forward. On the same day that the consent decree was handed down, Google launched +1, its version of the Facebook “Like” button. Seemingly to ensure compliance with the order, Google made sure to emphasize in all places where +1 appears that +1-ing is a public display of your affection for a url — and will be visible to others in your network. Users must check a box acknowledging this before they can start using the product.

Fast Company thinks the real downside of the decree is that Google can no longer take the “launch cool product half-baked, and apologize later if something goes wrong” approach — a popular one at Google and for  the rest of the Valley, especially when it comes to social products (as many Facebook users know):

Silicon Valley is renowned for its culture of innovation. There a common, renegade approach is to send products out into the world while they’re still half-baked, in the belief that it’s better to improve them based on real-world use, rather than trying to perfect them behind closed doors.

And the Valley accepts, of course, that this approach means that they’ll sometimes stumble, that some products might blow up in their faces. But it’s willing to live with that, believing that it’s ultimately better–and that they’ll innovate faster–if they ask forgiveness rather than permission. For the most part, the “Apology Approach to Innovation” works. Even when companies stumble, the consequences have generally been minimal–a few waves of invective from users and the tech press.

via What the Google Buzz-FTC Settlement Means for the “Apology Approach” to Innovation | Fast Company.

Google’s settlement with the FTC threatens that approach. If a half-baked product ends up violating people’s privacy in some way that Google did not foresee (as Buzz did, or as Beacon did when Facebook launched it) the company faces a fine of  $16,000 per violation, according to the order. With its millions of users, that could add up fast.

When it comes to social, Google wasn’t feelin’ it with this consent decree. It had nothing to say on the record about the settlement.

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