Don't know if you've been tracking the Facebook advertising mini-scandal that's been going down the last couple of months, but it is pretty interesting. The online privacy issue has been percolating for more than a decade now, and it's becoming clear that privacy advocates are losing the battle.

 Here's what happened: In November, Facebook launched their "Beacon" advertising and promotional system. The program tracked Facebook users' online purchases at external websites that are partnered with Facebook in the Beacon program. Then these purchases would be posted to the Facebook members' news feeds, going out as alerts to all other Facebook members on the friends list. In other words, Facebook essentially broadcast your online purchases for all your friends to see.

It's hard to believe that anyone thought this was a good idea, much less the dozens of Facebook executives and industry professionals that must have signed off on the plan. Predictably, the Beacon program prompted howls of protest from privacy, security and legal experts. Even MoveOn.org got into the act. Facebook responded by asserting, lamely, that users could opt out of the program any time they wanted. But the opt-out mechanism was ridiculously -- some say deliberately -- confusing and hard to even find. (Click here for a useful slideshow presentation on the situation.) Most users didn't even know what was happening until they saw their news feeds going out.

Facebook CEO Mark Zuckerberg has since apologized, and users can now opt out of the Beacon system much more easily. But critics contend that Facebook is still collecting data about users' activities on external websites, and that the company's targeting and tracking systems are troubling, to say the least.

It reminds me of an incident from way back in the '90s, when then-CEO Scott McNealy of Sun Microsystems casually dismissed consumer privacy issues at a major industry event. "You have zero privacy anyway," McNealy told a room full of reporters and analysts. "Get over it."  I was actually there at the event, and remember hearing that and thinking: "What a terrifying thing for an industry leader to say. Too bad he's right."

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