United States: The Hidden Risks Behind Facebook’s Login Tools - Part 2

In part one of this article we reviewed Facebook's history and explored how Facebook has created the perception among marketing personnel that the social media Goliath is the key to e-commerce success. In this section, we will explore the serious implications that flow from having your company's website permit users to login using their Facebook credentials.

Facebook's Statement of Rights and Responsibilities defines the Facebook Platform as "a set of APIs and services (such as content) that enable others, including application developers and website operators, to retrieve data from Facebook or provide data to us."1 A website allowing a user to register for its site using her Facebook credentials is clearly retrieving data from Facebook and/or providing data to Facebook. Therefore, adopting either the Login Tool or the Social Plugin Login renders the participating website part of the Facebook Platform and subjects that website to all of the Facebook terms and conditions.

By creating the Facebook Platform, as discussed above, Facebook aimed to facilitate the development of new apps by third-party independent developers. In this context it made sense that Facebook would forbid apps from including terms of use or privacy policies that were inconsistent with Facebook's own terms and privacy policies.2 However, incorporating a few lines of code provided for free by Facebook seems qualitatively different than developing a brand new app.

Nevertheless, as written, Facebook's terms and conditions — assuming one can find the relevant provisions within the 11 separate documents making up Facebook's terms and conditions — make clear that the mere adoption of either the Login Tool or the Social Plugin Login make any site using either of those features part of the Facebook Platform.

Indeed, assuming that counsel was consulted about the adoption of the Facebook Login it would be understandable if the legal review did not focus on the special provisions in Facebook's Statement of Rights and Responsibilities applicable to Developers.3 After all, adoption of the Facebook Login tool or the Social Plugin Login does not require any independent development — the adopter need only follow instructions provided by Facebook on its website.

Moreover, confronted with Facebook's highly complex terms, which are spread across no less than 11 different documents, an in-house lawyer could easily assume that a review of these documents is not necessary because the company's own website has its own terms and conditions that limit the right of anyone, including Facebook, to access the company website for any commercial purpose. For instance, consider this provision from Match.com's terms of use:

The Website is for the personal use of individual Members only and may not be used in connection with any commercial endeavors. Organizations, companies, and/or businesses may not become Members and should not use the Service or the Website for any purpose. Illegal and/or unauthorized uses of the Website, including collecting usernames and/or email addresses of members by electronic or other means for the purpose of sending unsolicited email...4

This provision, if applicable, would prohibit Facebook from collecting any data about members of Match.com or performing an analysis of who accesses Match.com via their Facebook credentials. Unfortunately, Facebook terms and conditions expressly state that any application or website that is part of the Facebook Platform may not have any term or condition that is inconsistent with Facebook terms of use.5 Hence, the limitations contained in many websites which dovetail those contained in Match.com's terms and conditions are simply irrelevant.

A review of the special provisions applicable to developers in Facebook's Statement of Rights and Responsibilities, namely Section 18, reveals three critical risks that should give any company pause before permitting users to access its website by using their Facebook credentials. In addition, the provisions applicable to all Facebook users include another term which presents an issue that should be considered carefully.

1. Facebook has the right to audit your website.6 Presumably Facebook maintains this right in order to assure that any app or website that is part of the Facebook Platform is legitimate and not engaging in activities that violate Facebook's terms. Notably, however, this audit right is not limited in any way, neither with respect to what may be audited nor any obligation of confidentiality with respect to any information learned by Facebook in the course of an audit.

2. Facebook has the right, either alone or working with third parties (who might well include your biggest competitor) to create a competing website.7 There is nothing in Facebook's terms that prevent it from using information collected during an audit of your site in connection with its efforts to create a competing website. The absence of any confidentiality obligation with respect to information learned by Facebook during an audit becomes a greater risk in light of Facebook's explicit right to work with third parties to create a competing website.

3. Facebook can use any information it collects from your site to create targeted advertising opportunities for your competitors.8 For instance, Match.com allows users to sign onto Match.com using their Facebook login. As a one-time Match.com subscriber, I can report that when I signed onto Match.com directly I never received any dating advertisements from Facebook. The day after I signed into Match.com using my Facebook credentials, I began to receive and continue to receive to this day advertisements on my Facebook home page promoting competing dating sites for people in my demographics.9 The other theme of the advertisements I receive on a daily basis relate to web-based Texas Hold Em services, no doubt reflecting that I am an active player of Texas Hold Em on Zynga and do not have a separate Zynga account but access that service exclusively through Facebook. In other words, any company that uses the Facebook Login tool is making it easy for a competitor to target their customers.

4. Facebook reserves the right to charge for its services in the future.10 While this provision was most likely written to address the possibility that Facebook could charge members some membership fee, there is nothing restricting Facebook from announcing that it will charge a website a few cents each time a visitor accesses the site using her Facebook credentials.

Significantly, Facebook's terms of use do not address what it will do in the event that it implements a fee system and a company using a Facebook login refuses to continue the service. Will users trying to access your site receive an error message advising them that they now must register for your site directly? Or will Facebook direct them automatically to a site that Facebook represents provides comparable goods or services? For instance, if Facebook decides to charge Match.com five cents each time I access that site using my Facebook login and Match.com elects to refuse to pay that fee, what will happen the next time I try to access my Match.com account using my Facebook credentials? Based on Facebook's rights to develop and promote a competing service, could Facebook prompt me to join a competitor of Match.com by responding to my login attempt with the following: "Match.com no longer accepts Facebook login. Facebook suggests you use XYZ dating site that will accept your login and will waive any fees for the remainder of your subscription with Match.com."

Even if Facebook does not adopt this particular strategy, because so many companies have invited visitors to avoid registering for their individual websites by using their Facebook credentials instead, Facebook has gathered considerable leverage.11 If more than half of a company's users are accessing its site via a Facebook login, will it have any choice but to pay Facebook any "reasonable" charge it may deem to assess?

Some may choose to downplay these risks as purely theoretical. Others might dismiss these risks based on the perception that the outcry against such practices would be so strong that Facebook would never exercise these rights. In this author's opinion, these views are naive. Facebook has already demonstrated a willingness to take aggressive action, even if it is likely to provoke class actions costing it millions of dollars when it knows that the upside of that strategy justifies that risk.

Similarly, Facebook clearly is looking for new ways to profit from its services. Recently, for instance, Facebook announced that it was testing giving members the opportunity to send messages to nonfriends for one dollar per message. At least one commentator saw this development as part of Facebook's testing the waters to create its own dating service.12 This development evidences Facebook's exploration of new methods for monetizing its services. Based on the widespread acceptance Facebook Login has already won, it would be surprising if Facebook did not explore ways to monetize that service as well.13

These four risks — standing alone — strongly weigh in favor of avoiding use of any Facebook Login procedure.

The third article in this series — focusing on the confusion arising from the fact that Facebook offers two methods for allowing a visitor to use his Facebook credentials to sign into a third-party website — will appear on Law360 on Jan. 17, 2013.

Previously published in Law360, New York (January, 2013).

Footnotes

[1] Facebook Statement of Rights and Responsibilities, Section 18.2https://www.facebook.com/policies/?ref=pf#!/legal/terms (Last revised December 11, 2012). (last visited January 3, 2013).

[2] Id. at Section 19.2 (Facebook's statement of terms "makes up the entire agreement between the parties regarding Facebook, and supersedes any prior agreements.") and Section 8.3 ("You will not place a Social Plugin on any page containing content that would violate this Statement if posted on Facebook."). https://www.facebook.com/policies/?ref=pf#!/legal/terms . (last visited January 7, 2013).

[3] In the most recent enumeration of this Statement, Section 18 is described as a special section applicable to Developers and Operators of Websites. However, to the best of this author's recollection, prior to December of 2012, this Section 18 was identified as applicable only to Developers. Of course, Developers as that term was used would have included someone using the code necessary to implement either the Login Tool or the Social Plugin Login.

[4] Match.com Terms of Use Agreement, Section 5, http://www.match.com/registration/membagr.aspx?lid=4 (Last revised April 9, 2012). (last visited January 3, 2013).

[5] Statement of Rights and Responsibilities, supra note 23, at Section 19.2 (Facebook's statement of terms "makes up the entire agreement between the parties regarding Facebook, and supersedes any prior agreements.") and Section 8.3 ("You will not place a Social Plugin on any page containing content that would violate this Statement if posted on Facebook."). (last visited January 6, 2013).

[6] Id. at Section 9.18.

[7] Id. at Section 9.19.

[8] Id. at Section 9.17.

[9] For instance, none of these advertisements are for dating services targeting persons under the age of 30 or religious Christians (even though they are among the fastest growing dating services at this time). Clearly, Facebook has identified me as a Jewish man over the age of 45 and inundates my home page with dating services tailored to my presumed needs.

[10] Id. at Section 9.14.

[11] One recent study shows that the majority of users prefer social media login options over registering separately for a site. See Goings & Abel, supra note 5.

[12] Quentin Fottrell, Is Facebook Becoming Match.com? Mashable.com (December 21, 2012) http://www.marketwatch.com/story/is-facebook-turning-into-matchcom-2012-12-21?siteid=YAHOOB (last Visited January 5, 2013).

[13] If Facebook does not begin charging for this service, one might assume that is because the value of the data they collect from the use of Facebook credentials is so valuable that they do not wish to threaten that source of data collection. Of course, that would suggest that the scope of data being collected is far larger than most might imagine.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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