Are privacy problems killing Facebook?

Facebook's US growth and traffic both fell hard in June. It seems Facebook's privacy problems are finally having an impact.

Interesting news from the world of Internet bean counters: Facebook’s growth last month stalled to virtually nothing – at least here in the US. And a number of people are pointing to the social network’s seemingly endless series of privacy and security gaffes as the culprits.

According to market research wonks Inside Facebook, the world’s biggest social network added just 320,000 new US users in June. Most sites would be thrilled to add 320K a month (at eSarcasm, we’d be ecstatic with a quarter of that). But Facebook is the 5000-pound gorilla of social nets, and it takes a lot of bananas to feed it – nearly 8 million new bananas in May, for example.

[ See also: Facebook's privacy controls are seriously broken ]

Why the drop in new users from 7.8 mill to 320K? Normal attrition or monthly fluctuations couldn’t account for that steep a plummet. It’s pretty clear all that bad press Facebook has been pulling in has scared off the newbies. And frankly, that’s a good thing. That’s what bad press is for.

More troubling to our hoodie-wearing heroes is that usage of Facebook last month actually declined among 18 to 44 year olds – who represent 70 percent of Facebook’s US user base -- to the tune of about 150,000. That’s a rounding error relative to FB’s 125 million active US users, but a rounding error in the wrong direction none the less.

I’ll let the boys and girls at Inside Facebook state the obvious:

“One possibility is that we’re finally seeing the backlash from heavy media attention to Facebook privacy issues — some of which were real, some the result of confusion and sensationalism. Regardless of the causes, the age groups that logged a loss in June is also the one most likely to have paid attention to the privacy debates, and the timing could be correct, since the Facebook ad tool we use to gather this data is often several weeks behind.”

Inside FB also notes that this might be a blip. Maybe everybody was taking advantage of the fine June weather we had and got out of the house for a change. Maybe somebody misplaced a decimal point in their calculations. But I think not. I think a lot of Facebook users got a sudden wake up call as to what was really happening to their data. And now it’s time for Facebook to get a wake up call.

Listen: I rag on Facebook for privacy violations probably more than anybody. And so far, what Facebook has done really isn’t that bad, relatively speaking. It’s what Facebook might do that worries me. Sharing my music preferences with Pandora or my likes and dislikes with Yelp doesn’t bother me – I already use Pandora, and I don’t give a damn about Yelp.

But sharing my brand preferences with select advertisers without my permission would bother me. Sharing my status updates or my political or religious affiliations with companies like Choicepoint or Experian that Hoover up data and resell it thousands of times for background checks would bother me. To the best of my knowledge Facebook hasn’t done that – yet. But it doesn’t mean they won’t.

One out of three users already regret something they posted on Facebook and other social nets. Imagine how much they’ll regret it if it ends up costing them a job, or a home loan, or insurance coverage.

The best, if not exactly original, metaphor here is the frog in the pot of water. Throw a frog into a pot of boiling water and it will jump out. Throw it into a pot of cold water and gradually turn up the heat until it’s boiling, and you end up with frog stew.

Since its birth in 2004 Facebook has been steadily turning up the heat, sharing more and more of our personal information by default with each new iteration. Last month, it seems, the frog had finally had enough and jumped out of the pot before it (ahem) croaked.

Now we’ll see how Facebook responds. Will it crank down the heat? Or is it already so huge that growth doesn’t matter to it any more? Me, I’m betting we’ll see a lot more boiled frogs before we’re through.

When not abusing amphibian metaphors, TY4NS blogger Dan Tynan tends his snark garden at eSarcasm (“Geek Humor Gone Wild”). Follow him on Twitter if you dare: @tynan_on_tech.

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