Firm targets privacy bill; ‘They just worked in the background’
By John Letzing, MarketWatch - Oct. 27, 2010
SAN FRANCISCO (MarketWatch) — Facebook Inc., which has been bolstering its political influence as it grows in popularity, has made an initial foray into lobbying in its home state by targeting a specific privacy bill, according to filings with the California Secretary of State’s office.
Facebook spent more than $6,600 on lobbying in California for the period between April and June, according to a recent filing. The Palo Alto, Calif.-based company’s attention was specifically directed at the Social Networking Privacy Act, a bill introduced in the state Senate in February, which would restrict social-networking sites from displaying the addresses and phone numbers of minors.
The reported lobbying activity underlines Facebook’s need to make its case with both state and federal legislators, amid growing concerns about online privacy. It also highlights the early stage of the social-networking firm’s progress.
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Google Inc. (NASDAQ:GOOG) , for example, reported spending nearly seven times as much as Facebook on lobbying state government in California for the period ended in June, according to public filings.
Facebook’s lobbying activity in California comes as the company has tapped Sacramento-based Gonzalez Public Affairs to represent it at the state capitol.
The bill drawing Facebook’s interest, the Social Networking Privacy Act, was introduced by State Sen. Ellen Corbett, a Bay Area Democrat. It calls for businesses providing social-networking services online to refrain from displaying the home address or phone number of users under 18 years of age, or face civil penalties.
The bill had been passed in the state Senate in April by a margin of 25 to 4, before running aground in the state Assembly. “By the time it got to the assembly, the opposition lobbying had begun,” Corbett said.
She added that her staff had reached out to Facebook for input, though “It appears they just worked in the background, to kill the bill.”
A Facebook spokesman said the company is isn’t prepared to comment.
Facebook’s California lobbying report included an expense for dinner with the majority leader of the state Assembly, Charles Calderon, at a Sacramento restaurant in June.
Calderon, a Southern California Democrat and a member of the state Assembly’s Committee on Arts, Entertainment, Sports, Tourism and Internet Media, voted in June to move the Social Networking Privacy Act forward for review by the body’s judiciary committee. Despite Calderon’s vote, the legislation stalled.
A spokesman for Calderon said he is “still open to hearing the issues” related to the bill.
Corbett could reintroduce the Social Networking Privacy Act, though she said she hasn’t decided what to do yet. “This is an issue I’m very interested in delving much further into,” she added.
Critics of the bill have called it well intentioned but flawed. A Washington, D.C.-based group called Stop Child Predators said in a statement issued in July that “educating minors of the real risks they face online is essential to keeping them safe, and parents shouldn’t be encouraged to believe that restricting the display of certain information … will make their children safer.”
Facebook’s policies state that it’s off-limits to children under 13, and recommend that minors over 13 ask their parents before posting information about themselves.
Founded in 2004, Facebook has a vested interest in the increase in social contact and sharing of information online — a trend that’s drawn scrutiny from privacy advocates and regulators around the world.
The closely held company is young, but growing up fast. Facebook boasts more than 500 million active users, and is currently valued at $32.8 billion, according to SharesPost Inc., which provides an exchange for shares in private firms.
Though it isn’t a precise comparison, that valuation among private investors would place Facebook well ahead of the current, combined public market value of Internet stalwarts Yahoo Inc. (NASDAQ:YHOO) and AOL Inc. (NYSE:AOL)
In addition to efforts made on its own, Facebook is a member of larger organizations that lobby lawmakers.
TechNet, a group that includes Facebook, Google, Microsoft Corp. (NASDAQ:MSFT) and others, also has made lobbying efforts in California related to the Social Networking Privacy Act, according to public filings.
While expanding its political influence close to home, Facebook also has strengthened its presence in Washington. According to records compiled by the Center for Responsive Politics, Facebook spent $60,000 lobbying members of Congress and federal regulators in the second quarter ended in June, up from $41,390 in prior period.
The lobbying activity comes as public flare-ups over Facebook’s privacy practices have become commonplace.
A Freedom of Information Act request to the U.S. Federal Trade Commission, made by MarketWatch in May for communications between Facebook and the regulator concerning changes to Facebook privacy policies during the five months ended in April, was denied.
The FTC said in a response letter in July that some of the requested records were exempt from disclosure, because they include “information obtained by the commission in a law-enforcement investigation.”
The Electronic Privacy Information Center as well as other privacy advocates called last year for an FTC probe of Facebook’s privacy and security practices.
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