Overview

When it comes to protecting your users’ privacy and free speech, mistakes can cost you not only money but also your good name.

Government oversight and penalties can hurt. For example, data broker ChoicePoint’s insecure data practices cost it $25 million in government fines, legal fees, and costs to notify consumers about a security breach, as well as a rapid 9% dive in stock price. Comcast was taken to task by the Federal Communications Commission and forced to defend against class-action lawsuits for interfering with free speech by slowing access for customers using peer-to-peer technologies.

Several large companies have felt the sting of lawsuits related to their privacy and free speech practices. AT&T and Verizon have both been sued for hundreds of billions of dollars in multiple class-action lawsuits and have spent massive amounts on attorney and lobbyist fees after reportedly collaborating with the National Security Agency's massive warrantless wiretapping and data-mining program. Apple was slapped with $740,000 in attorney’s fees when it tried to expose the identity of individuals who leaked information to bloggers about new products.

Free speech and privacy violations can directly affect a company’s revenue as well. Facebook lost major advertising partners and was the target of online protests from 80,000 of its users for failing to provide proper notice and consent for its Beacon advertising service tying a user’s other Internet activities to her Facebook profile. NebuAd’s plan to meticulously track all online activity, down to every Web click, and then use this information for targeted advertising went awry when consumers sounded the alarm for online privacy and free speech; in its wake, major partnership agreements crumbled, a Congressional committee investigation was initiated, and the company’s founder and chief executive resigned.

Companies can also suffer reputational harm from free speech and privacy violations. Google's "do no evil" motto was called into question, and its public goodwill threatened, after the company released Google Buzz, a social networking product that exposed users’ private information by default with insufficient notice. Although Google acted quickly to fix the most egregious privacy problems, the immediate bad press may have harmed Buzz’s chances of competing in the social networking space. Buzz’s privacy flaws also quickly became the subject of a class action lawsuit and an FTC privacy complaint.