The program now will be opt-in only, meaning that members must affirmatively consent before Facebook shares information about their online shopping.
It's not surprising that Facebook made this decision given the brewing user and advertiser resistance to the program. More than 50,000 members had joined a MoveOn group, "Petition: Facebook, stop invading my privacy!" and at least one big marketer, Overstock, had suspended its use of the program.
In fact, what's surprising is that it took Facebook three weeks to decide to retreat from a program that had such obvious flaws. Almost as soon as the program was unveiled, industry pundits pointed out the inherent privacy problem revealing users' shopping history by default. The prediction -- which turned out to be true -- was that many people wouldn't notice and/or understand the opt-out provisions.
Obviously, not every Facebook user and/or pundit was outraged by the program and not everyone saw it as a privacy invasion, given that users could, at least theoretically, opt out. At the same time, it's hard to find too many people out there that liked it. While some users were willing to tolerate, say, all of their friends learning that they had just purchased "American Gangster" tickets on Fandango, there was little enthusiasm for the prospect.
Even with the changes, Facebook isn't out of hot water with privacy advocates just yet. There's still the SocialAds program, which tells members which of their friends has signed up as "fans" of particular marketers, in effect turning members into endorsers. This program is seen as problematic for a few reasons, including that people traditionally are entitled to receive compensation for lending their names to ad campaigns.
Still, at least for now, Facebook seems to have solved the most troubling aspect of its new ad platform.