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Facebook policy change may open ad front against Google

It's a clarification, not a major change, says Facebook. But it's also a shot across Google's bow.

A change and clarification in Facebook's Data Use Policy is reminding potential investors that the company may roll out an advertising service that will display ads to Facebook users when they're not actually on Facebook. This would be a direct play for Google's main revenue stream.

Changes to the data use policy are explained in a 2,800-word document. In the "advertising" section, Facebook says, "We're also clarifying our existing disclosure that we might show ads off Facebook to explain that, if we showed these ads, they may or may not include social context (such as whether your friends have 'liked' a particular business)."

Barry Schnitt, Director of Corporate Communications and Public Policy at Facebook, told CNET that "We can foresee a future where we might serve ads off of Facebook, and they may be standard ads or they might be, 'your friend John liked' a product." Schnitt explains that both types of ads -- standard and social -- are currently available to advertisers on the Facebook site itself.

Some of the clarifications to the policy were driven by an agreement Facebook came to with the Irish Data Protection Commissioner after an audit.

In the run-up to the Facebook IPO, it is telling that the company is hinting at future revenue streams, like off-site advertising. The company also announced this week that it will be rolling out an app showcase, the App Center. It is CNET's analysis that Facebook stands the gain the most from the social data that Facebook-connected apps generate for the company; revenues from app sales themselves are not as important to the company. Should Facebook be preparing an off-site advertising service, data gleaned from users of apps would help make ad targeting even more effective.

Facebook says it does not actually share information it gathers from its users with advertisers. Like Google, Facebook is in the business of directing ads to users who meet criteria that advertisers request. It's only when a user chooses to connect with an advertiser that the advertiser can collect personal information directly.

The Facebook data user policy was last updated in September of 2011. Schnitt says the company wanted to do some "organizing and housecleaning" in addition to responding to the Irish DPC.

Schnitt says users who want to engage with Facebook over its changes to its policy can interact with the privacy team at the Facebook Site Governance page and watch a live interactive video with Facebook privacy chief Erin Egan on Monday, May 14 at 9 a.m. Pacific/noon Eastern. CNET will be covering it. Egan has a blog post, Enhancing Transparency In Our Data Use Policy, that explains the process.

Facebook has posted its complete policy with changes tracked (PDF) between the September 2011 edition and the proposed changes.