* Startup sparks controversy by uploading address books
* Path CEO apologizes in blog
* Path launched in late 2010 as 'hipper' version of Facebook
* Path fiasco 'not a fatal error' -analyst
By Gerry Shih
SAN FRANCISCO, Feb 9 A privacy debate
surrounding fledgling social network Path went viral this week,
triggering discussions on blogs and on Twitter about how far
social networks can go in using members' private data.
Path was sharply criticized in blogs and social media forums
this week after an independent software developer revealed that
Path's Apple iPhone application uploaded users' address
book data to its own servers without permission.
Its travails demonstrate how easily today's social media
startups -- which by definition thrive by sharing users' views
and information -- can still run afoul of users' privacy
sensitivities even at a time of constantly shifting consumer
Path, which now has 2 million users, launched in November
2010 to considerable buzz around Silicon Valley. The service has
positioned itself as a more intimate and visually appealing
version of Facebook -- the social network that weathered a
string of privacy controversies of its own as it grew to become
a multibillion-dollar company on the brink of going public.
On Tuesday, Arun Thampi, a software developer in Singapore,
discovered Path's data uploads and published his findings on his
website. The news went viral, sparking commentary on technology
blogs and on Twitter.
Other bloggers quickly noted that Path's practice may have
run afoul of Britain's Data Protection Act and Apple's App Store
policy prohibiting such data access.
Dave Morin, Path's chief executive, responded on Thampi's
blog, saying that his company uploads the data to help users
find and connect to their friends, and that the company had
already rolled out an opt-in mechanism for the Google Android
platform that asked user permission before accessing contact
Morin later apologized in a blog post on Path's website,
adding that the company deleted "the entire collection of user
uploaded contact information from our servers."
By then, hundreds of Path users (and many nonusers) had
already vented their frustration at Morin through Twitter.
Now, as Path looks to emerge from the episode, its fate may
be determined largely by the social network that it hopes to
SHIFTING NOTIONS OF PRIVACY
Facebook's success, and its record of shrugging off the
periodic backlash over perceived privacy intrusions, has
fundamentally changed consumer attitudes, analysts say.
Facebook has "shown and demonstrated that it can push the
boundary of what can be considered private," said Charlene Li,
the founder of the Altimeter Group, a social media research
company. "Our notions of privacy change over time, based on the
utility of that information."
But the problem, analysts say, was that Path did not ask for
permission to access users' address books -- even if consumers
are increasingly comfortable with the idea.
Ray Valdez, an analyst at Gartner, said the company took a
hit to its reputation but will move on.
"It's not a fatal error," Valdez said.
Still, in papers filed last week with the U.S. Securities
and Exchange Commission ahead of its highly anticipated initial
public offering, Facebook noted explicitly the danger of
potential backlashes over privacy. It said that improper access
of user information could "harm our reputation and adversely
affect our business."
Even if public attitudes toward privacy appear to be
softening in a free-sharing era, analysts say such controversies
can pose grave threats to fledgling companies that often do not
have internal checks -- such as chief privacy officers at larger
companies like Facebook.
For startups seeking to build a user base, the risk can be
"These networks exist only if you trust them," said Li of
Altimeter Group. "For these growing companies, every single step
you take has to be taken with building trust in mind."
As competition intensifies in the social networking arena, a
company's perceived sensitivity to privacy issues could affect
its bottom line.
Last week, as Google Inc grappled with an
outpouring of criticism over how it utilized private user
information across its various products, Microsoft Corp
- a chief competitor to Google - unfurled an ad touting its own
"Facebook has an enormous user base and can weather a few
privacy storms," said M. Ryan Calo, a fellow at the Stanford Law
School Center for Internet and Society. "It may not be an
existential threat when you have 800 million users, but it is a
competitive differentiator that can't be ignored."