Eric Schmidt's now infamous quote during a CNBC interview sums up how companies offering social networking services think about privacy, "If you have something that you don’t want anyone to know, maybe you shouldn’t be doing it in the first place." Or does it? Facebook has been stumbling with privacy policy changes and now plans to share user data with external sites automatically. That is scary. Very scary.

Is Facebook betting that it has reached such a large size (400 million active users) that users will not retaliate by leaving en masse? Or is it that they are confident that the alternatives are just as bad? Rather, we would like to ask, does this represent an opportunity for someone to compete with Facebook or is this the only way they can achieve the revenue they would like to see?

When I first got my G1 (aka Google Phone) and later N1 (Nexus One) a friend argued that he would never buy such a product as it does not respect his privacy. I paused for a second and wondered, just how much I cared about my own privacy. An American might feel very protective of his/her personal information whereas someone whose constantly searched a little 'extra' and 'randomly' selected for more thorough screening at airports may have a completely different take on it.