Will the 'Facebook Phone' Become a Privacy Nightmare?

The great thing about writing about products that don't yet exist is that you can say virtually anything about them and not be proven wrong. So it is with the "Facebook phone," rumors about which have been swirling across the InterWebs this past weekend.

If TechCrunch is to be believed, Facebook is working on a smart phone of its own. Facebook denies this, of course. And you have to admit the idea does not make a whole lot of sense for consumers. A Facebook app is available for every smart phone OS already. What could a Facebook phone possibly add to that?

On the other hand, a Facebook phone could provide a nice revenue boost for the company, making it a more attractive investment as it veers toward the inevitable IPO. Facebook probably wouldn't mind taking a slice out of your monthly phone bill, with the rest going to whatever telecom(s) it partners with to actually deliver the service. It surely wouldn't mind having a native platform where it can deliver mobile ads and collect all of the revenue, instead of having to share it with Google, iAds, etc.

And it would explain why Facebook jumped with both feet into the geo-location biz with Facebook Places. Why ask users to load your app and manually check into a place when your phone's GPS can do it for you automatically?

But from a privacy point of view, a Facebook phone could be a nightmare waiting to happen. Because if the 'face fone' is real, Facebook would automatically become the most privacy unfriendly player in the smart phone space.

Save for letting the NSA in the back door without a warrant to snoop on Web traffic, the telecoms have been relatively good about consumer privacy. For one thing, they've been leery about commercializing the location data in their hot little hands. Verizon even successfully fought off the RIAA when the record companies tried to squeeze its ISP division into revealing the real names of some of its customers.

Facebook, however, does not have such a good track record when it comes to privacy. Its philosophy is that sharing data is good, and the more data you share, the better it is for everyone (but especially for Facebook).

You'd think, given how soundly Facebook got spanked for its changes it made to its data sharing policies last spring, it might be more careful in the cell phone space. And it very well might. Then again, people said the same thing after its Facebook Beacon ad technology did a faceplant. That happened three years ago, yet it failed to dissuade Facebook from altering its default user settings last December to make a lot more profile information public by default.

Legally, Facebook would not be allowed to divulge who you called or what you said, unless it was under a legal order to do so (and then, only to law enforcement).

But it could certainly share your location information with merchants and advertisers, if it wanted to. It could combine that data along with information about your likes, dislikes, the groups you belong to and the topics you comment on to build a very comprehensive portrait of you, which then becomes a product it markets to advertisers.

That profile in turn also becomes a treasure trove for anyone with a legal reason for seeking information on you. Or maybe Facebook gets into the data mining/background check business and sells this information directly. There are all kinds of business models around the compiling and repackaging of data. And make no mistake, nobody has more data about you than Facebook, except for maybe Google.

That doesn't mean Facebook will do any of these things. If it tried to, some people (including me) would likely scream bloody murder. But it's something to give you pause.

On a personal level, the wrong privacy settings could expose your wanderings to the world, making you easy prey for digital stalkers -- especially if Facebook does indeed roll out a 'subscribe to me' feature with dicey defaults. And if you think Facebook's privacy controls are hard to deal with on a computer display (and they are), imagine trying to navigate them on a 3- or 4-inch smartphone screen.

So I guess you can tell I'm less than excited by the prospect of Facebook getting into the phone business. Hopefully, this is yet another series of Internet rumors that turn out to be the byproduct of feverish imaginations and a slow news week.

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