The fallout over Google's bumbling social-network Google Buzz venture continued into its second week with a class-action lawsuit on behalf of Gmail users who feel their privacy was violated.
And as blogs buzzed with comparisons to Facebook's badly received Beacon feature and the risk to children who use Gmail, an analyst speculated that there could be an impact on future Google business prospects.
"When Google won the contract with the City of Los Angeles last year, they made a statement: The cloud is safe, you can trust us with even your most critical data," said Scott Menter of Shire Ventures, a California-based technology and business consulting practice and former CIO of WaMu Investments. He referred to a deal to outsource e-mail for 30,000 LA municipal employees to Google.
"The Buzz debacle, which has much greater visibility than the LA deal outside the IT world, has considerably diminished the credibility of their position," Menter said. "While I don't see consumers fleeing Google or Gmail en masse as a result of this issue, it's likely to have a chilling effect on future corporate IT deals."
But it's not just Google who should worry, Menter said. "That effect may spread to other cloud providers as we are reminded, once again, that one instance of poor judgment on the part of a vendor can compromise privacy and create an unacceptable level of risk," he added.
A Tough Week
Google Buzz went online last week, utilizing Gmail accounts and profiles as the template for a network that shares contacts and content from Google Reader and Picasa. In response to complaints, Google changed the privacy settings to make it easier to opt out and for users to choose who follows them.
But anger lingers. "Tying Buzz to Gmail, and then fumbling the privacy aspect of that service, served as a jarring reminder that a great deal of sensitive and personal data about our lives is in the hands of a large, for-profit corporation," Menter said. "It's a little like discovering that the friendly and helpful neighbor who loaned you his lawn mower has a pair of binoculars sitting on the windowsill opposite your bedroom. Maybe he's using them to spy on you, and maybe not, but you're not happy about it either way."
On Monday the Harvard Crimson reported that two law school students at the university, with the help of a Washington lawyer who specializes in class actions, would sue the search giant, alleging the company breached the privacy of users. (continued...)