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Monday Grok: Privacy bites back at Facebook

Hubris never looks good, flaming nanos and one to watch.

Facebook. Privacy. Google. Ladies and gentlemen, start your engines. Back when Mark Zuckerberg was still like a child, in 2009 he foolishly declared privacy dead. Had he declared himself more popular than Jesus or the Beatles, it would have been more advantageous. It would also have been true. And it would have avoided the wrath of the Federal Trade Commission (FTC) in the US, which pretty much launched an investigation into the company immediately, in response to a wave of complaints.

Now, according to a report in the Wall Street Journal, and picked up by outfits like ReadWriteWeb, the FTC is close to a settlement with the social media giant that will probably provide young Master Zuck with a lesson in hubris. According to the Journal’s report, people familiar with the talks say the settlement would require Facebook to obtain users' consent before making "material retroactive changes" to its privacy policies. This means Facebook must get consent to share data in a way that is different from how the user originally agreed the data could be used.

The company won’t, however, be required to get user consent to all changes made on the site, according to the usual suspects. ReadWriteWeb notes that Facebook will need to submit to privacy audits for the next 20 years. ReadWriteWeb also mentions Google’s problems with the FTC which charged Google with deceptive privacy practice after the launch of Google Buzz.

Indeed the feds have been busy of late. Twitter was likewise pinged for privacy privations. However, it was only required to submit to ten years’ worth of audit, not twenty. That’s probably because with Twitter's users the real problem is not protecting their private lives, but getting them to shut up about it.

Facebook made no comment about the WSJ story, however, Computerworld quotes one of Zuckerberg's earlier interviews about privacy."It's really about control," said His Majesty. Yes exactly, Mark, that's the bit that frightens the beejesus out of people.

Better late than never, or, you know, dead

It turns out that the five-year old iPod Nano gathering dust in the second drawer of the kid’s dresser might catch fire under unusual circumstances. So if you’re lucky enough to have bought one and still own it and lucky enough not to have it spontaneously combusted during that time, Apple has issued a recall.

According to a statement by the company, “Apple has determined that, in very rare cases, the battery in the iPod nano (1st generation) may overheat and pose a safety risk. Affected iPod Nanos were sold between September 2005 and December 2006. This issue has been traced to a single battery supplier that produced batteries with a manufacturing defect. While the possibility of an incident is rare, the likelihood increases as the battery ages.” Mashable, Techcrunch and others started covering the recall early Sunday (AEST), which is being treated more with nostalgic bemusement than the usual incendiary outrage that normally accompanies such announcements.

One to watch — getting Square

Finally this morning, here’s a heads up on a new startup in the US making enemies quickly — the right kinds of enemies too — credit card companies and transaction ticket punchers. Dwolla, an Iowa based startup with just 12 staff and a 28 year-old CEO named Ben Milne, is already processing $30 million to $50 million a month in payments and, according to Business Insider, is on track to move $350 million next year. Its shtick is that rather than taking a percentage of the transaction, it takes 25 cents a pop whether you move a million bucks or just one.

Milne’s motivation was profoundly simple, according to the story, “I owned a speaker manufacturing company and we sold everything directly through a website. I got really obsessed with interchange fees and how not to pay them..” Ok, so this is not a guy who gets invited to a lot of dinner parties.

Dwolla is one of several new payment systems to emerge in recent years to challenge the hegemony of incumbents like Visa and MasterCard, and PayPal. Square for instance, recently raised $100 million in financing and just last week added Sir Richard Branson to its investor list.

Andrew Birmingham is the CEO of Silicon Gully Investments and is a former associate publisher of The Australian Financial Review.

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