With its incredible growth (200 million to 400 million users in the last 12 months), and announcement at its April 21 F8 developer conference of new capabilities, Facebook seems to have become, as Chris O’Brien of the San Jose Mercury News says, “the most important company on the Web.”

The most far reaching announcement is the introduction of what is called the Social Graph API, a convention that allows developers (anyone with a Web site or a blog) to easily embed “Like” buttons and other functions on their sites, allowing users to “bring” their Faceboook identities wherever they go on the Web, outside of Facebook’s walled garden.

“With Facebook users comes their friends; incorporate these connections to make your product more engaging. Social plugins like the Like button and the activity feedenable you to offer social experiences with just a line of HTML. The Graph API enables you to integrate the social graph into your site in deep and compelling ways.”

I’ve added a Facebook “Like” button on this blog and it is insanely easy to do. I did so because I see the value of connecting my blog more closely with my Facebook friends, and because I wanted to understand how all this works.

All of this raises interesting privacy concerns. Facebook now knows a lot more about where people go when they are not actively on the company’s site, how long they spend there, and what they liked.

People may recall Facebook’s Beacon debacle, in late 2007. Eerily, the controversy over Beacon was, according to PC World, that:

“Beacon will report back to Facebook on members’ activities on third-party sites that participate in Beacon even if the users are logged off from Facebook and have declined having their activities broadcast to their Facebook friends…(and) users aren’t informed that data on their activities at these sites is flowing back to Facebook, nor given the option to block that information from being transmitted.”

Facebook seems to have been diligent lately in letting people know loud and clear, via its blog and other channels, about changes to privacy and other features. (I’m not saying people necessarily liked these changes.) I can recall one privacy feature recently though that I only became aware of through Facebook wall posts, though these could have originated from official announcements.

Facebook’s Social Graph API will surely add interesting capabilities and a different user experience, wherein users, no matter where they go on the Web, will feel like they’ve never left a Facebook page.

Unquestionably, this could be one of the most important changes to the way the Web behaves, particularly as Facebook is approaching half a billion users and is, as AOL once was, practically synonymous with the Web. Facebook isn’t the only company to embed functionality into remote sites, it’s just the biggest, fastest growing and most influential.

As we all adjust to this new way of doing things, there are a couple of things that need to happen:

  • Consumers need to be informed of their privacy options on Facebook, and maintain control over them. This can be difficult, as it is very complicated and rapidly changing.
  • Facebook must openly communicate any changes in its privacy controls, and more importantly, report any breaches in privacy, and quickly correct them.
  • The FTC needs to pay closer attention to what’s going on in social media and social networking to get ahead of the curve and at least understand, if not regulate, new technologies and the effect they have on consumer privacy rights.