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Facebook CEO Mark Zuckerberg listens to a question from the audience after unveiling a new messaging system during a news conference in San Francisco, California November 15, 2010. (ROBERT GALBRAITH/Robert Galbraith/Reuters)
Facebook CEO Mark Zuckerberg listens to a question from the audience after unveiling a new messaging system during a news conference in San Francisco, California November 15, 2010. (ROBERT GALBRAITH/Robert Galbraith/Reuters)

A regulatory nightmare: Facebook and its goal of a less private Web Add to ...

Chris Ye wants to know all about you and your friends. His business depends on it.

The co-founder of Uken Games, which develops software applications for social networks and mobile devices, is in his Toronto office sifting through information on the more than 100,000 people who play Superheroes and Villains, simplified adventure games his company has designed to for users of Facebook. Twice a day, he makes a point of studying their ages, genders, locations and friends to "get a pulse" on his customers.

The data - scraped from the massive store of information on which Facebook is built - has revealed to Mr. Ye and his team of seven employees a number of important insights. More than half of Uken's gamers are women. The most active players are men in their 40s. Without this data, Mr. Ye would never have been able to guess the profile of the players. More importantly, Mr. Ye knows his customers' friends - which means he knows precisely who his next potential customer is. What better motivation can there be for downloading an application on Facebook than knowing your pal is loving it?

On the Internet, information is power, and no company has more information than Facebook, which will likely eclipse Google soon as the world's most-visited website. Unlike Google, where users spend a few seconds or minutes searching for something and then move on, many of Facebook's 500-million users spend hours on the site every day. That shift - from a two-way street model of asking for and receiving information to a multidimensional set of interactions - has the potential to change the Internet in ways not seen since its popularization in the 1990s.

Imagine a future in which your social circle colours every on-line experience - in which websites customize content for you based on whom you know. In the not-too-distant future, an online shopping store's sales pitch to you may consist of a personalized pitch from one of your closest friends. A news website may present to you a strikingly different front page than it presents to anyone else, because its editors know from your Facebook profile that you like stories about politics, say, but not crime.

It's no longer far-fetched to imagine a Web where a users' every movement is a form of currency: walk down Robson Street in Vancouver and your mobile phone may light up with limited-time coupons to the restaurants closest to you. Announce the location of your wedding on your Facebook wall and, within minutes, the nearest caterers come calling.

But Silicon Valley's vision of a more open, more efficient, more personalized Web is the stuff of nightmares for privacy regulators. The battle between technology innovators and regulators will determine how quickly existing privacy boundaries can be redrawn to accommodate the ambitions of Web giants such as Facebook.

Canada can play a disproportionately large role in this tug of war because of its potent privacy laws and the work of its national Privacy Commissioner, Jennifer Stoddart. Since the small privacy regulator launched a pioneering investigation in 2009 into Facebook's practices, Canada has been at the forefront of one of the Web's most important issues.

CONTROVERSY IS A CONSTANT when Facebook innovates.

Ever since Mark Zuckerberg founded the social network's predecessor (Facemash, a site that showed photos of two Harvard students at a time and asked users to choose who was "hotter"), his handiwork has generated all kinds of backlash. The gamut runs from allegations of intellectual property theft to criticism that Facebook is cavalier about its users' privacy.

And yet, Facebook continues to thrive. And the more it grows, the more it pushes users to share.

Many of these changes arrive with no notice. When users logged on to Facebook on Nov. 6, 2007, they discovered the traditional feed of news from friends included alerts about some of their friends' Internet activities. If a friend had clicked a Facebook ad to buy a Playboy subscription or trip to Las Vegas, the news was shared with the social network. In Facebook's Palo Alto, Calif., laboratory, the innovation was seen as a service that deepened advertisers' connections with users.

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