Privacy comes under EU scanner

The European Union (EU) is set to change the way Facebook gathers users’ personal information to create targeted advertising. According to an Associated Press report, the EU wants to create a uniform law for data protection, updating laws put in place long before Facebook and other social networking sites existed.

Facebook, the largest social network across the globe, stores data collected from its 800 million subscribers using software that groups data by users' sexuality, religion and even location. The information is collected, irrespective of the user's individual privacy settings.

According to an Associated Press report, EU Justice Commissioner Viviane Reding said social networks must become more open about how they operate. Under her proposals, businesses, including internet service providers, would have additional responsibilities such as informing users of what data was being collected about them, for what purpose, and how the data was stored.

EU officials expect the draft legislation to be ready early next year, and after that, it could take up to 18 months for the Bill to become a law. However, the EU has to iron out differences between its members over privacy issues. Countries like France and Germany favour stronger protection for privacy, while Ireland, Britain and others prefer more market-friendly rules.

Facebook, in its data use policy, says, “We use the information we receive about you in connection with the services and features we provide to you and other users, such as your friends, the advertisers that purchase adverts on the site and the developers that build the games, applications and websites you use.”

To address privacy concerns on user data being made available to advertisers to target services to specific users, the EU is expected to introduce a directive in January to ban Facebook from displaying targeted advertising, unless the user explicitly allows it. Targeted advertising represents a major revenue stream for Facebook, and the ban could affect the social network’s plans to raise about $10 billion through an initial public offering. Though most of the user data is stored on computers based in the US, failure to comply with the EU legislation could mean massive fines for the company — a risk investors would not be prepared to take.