By Megan Barnett
June 9, 2010

The company still has no outside lobbyists even as it faces mounting privacy probes. Is Facebook’s Washington strategy too little, too late?

By Anna Palmer, contributor

A recent political attack ad from Democratic candidate Kamala Harris for California attorney general blamed her opponent Chris Kelly, who also happens to be Facebook’s former chief privacy officer, for designing the site’s “condemned” privacy policies.

“Chris Kelly released your private information,” the ad warned over ominous background music.

It’s not surprising the issue came up in that race, but Harris won’t likely be the last legislator who assigns political currency to the growing issue of social networking privacy.

While Facebook has started to make inroads in Washington in the past year, the small team it has assembled hasn’t assuaged the concerns of Congress or its counterparts abroad. The nagging public relations problem around its privacy controls is turning into a political minefield.

It’s not easy being Facebook. Precisely what makes it so successful — uncomplicated controls that allow the least computer savvy users to easily connect with each other — is under attack.

Facebook is the most popular social networking destination online, reaching a whopping 35% of all Web users. Nearly 500 million people worldwide have joined the social network, and all this talk about privacy isn’t slowing its growth — not yet, anyway.

But despite that growth — or perhaps because of it — Facebook just can’t shake the stigma that it’s abusing its ownership of all that personal information. While criticism dates back to 2007 and user consumer and privacy watchdog groups have repeatedly forced the company to make several changes to its privacy controls, the concerns have not abated. If anything, they have reached a crescendo, with governments in Canada, Norway, and the UK having filed complaints or launching investigations into Facebook’s privacy policies.

No Facebook friends on Capitol Hill

All of this has naturally led to a renewed interest in the topic from inside the Beltway. Several congressional committees have sought information from Facebook on its data controls, and watchdog groups have asked the Federal Trade Commission to open a formal investigation.

As Capitol Hill takes a closer look at Facebook, the tech company has responded by dipping its toes into the K Street influence game. It took note of its tech industry predecessors like Microsoft (MSFT), whose decision to largely ignore Washington as an upstart company cost it millions of dollars after the Department of Justice brought an antitrust suit against it in the mid-1990s.

So far, the social networking site is banking on a couple of key hires inside the Beltway to help shield it from official government intervention. The company hired one of its most formidable opponents — Timothy Sparapani, former senior legislative counsel for the American Civil Liberties Union, nearly a year ago. Sparapani has been charged with shepherding Facebook’s Washington image, beefing up its lobbying operation, and trying to keep it from becoming DC’s next big target.

In addition to adding personnel, Facebook is using its own platform to help win over policymakers. Just last week, Facebook launched its “Facebook and Privacy Page” to help “facilitate a discussion among users, policymakers, consumer advocates and others,” according to the company’s Facebook wall.

But Facebook’s Washington strategy may be too little too late. The company still has a small presence compared to its competitors without a single outside lobbyist representing the company. And in a town where campaign contributions often signal political clout, Facebook has opted against forming a political action committee.

Facebook CEO Mark Zuckerberg has found it difficult to personally tamp down the privacy concerns. Last week, he failed to sufficiently respond to questions about the company’s privacy controls at the All Things Digital Conference in New York.

Legislators need clarity

Public confusion and outrage over Facebook’s privacy controls are partly a reflection of Zuckerberg’s vague comments around privacy. The continued lack of a cohesive message suggests the company should have beefed up its Washington presence long ago to help smooth the wrinkles from its CEO’s public gaffes.

And Facebook’s hurdles are far from over. Congress is continuing to examine how the tech industry collects, stores and uses data it pulls from consumers. Late last month, House Judiciary Committee Chairman John Conyers (D-Mich.) asked Facebook and Google to cooperate with examination of the companies’ privacy practices. In a letter, Conyers asked for a “detailed explanation” about the company’s privacy policies and information that Facebook may have given to third parties “without the knowledge of account holders.”

As Congress continues to look under the hood of the Palo Alto company, joining in on the act is the Federal Trade Commission. While FTC Chairman Jon Leibowitz has declined to say whether the agency has opened a formal investigation, this is clearly not the end of the story.

Like its regulators, Chris Kelly, Facebook’s former chief privacy executive wrote in an email to MoveOn’s listserv last week that he remains “troubled… that users’ information will be shared with third parties without clear consent.”

Kelly lost the primary race on Tuesday. Cue the ominous music.

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