Facebook brags about how it understands its vast community.

However, some members of the community have been perturbed lately, if not creeped out. Even MoveOn.org initiated an online protest.

The reason is Facebook's attempts to monetize things through its Beacon advertising system. Basically, it shows your online friends where you are shopping, such as from places like Amazon.com (NASDAQ: AMZN).

True, this may be useful in terms of getting helpful information (think of Beacon as a recommendation service) - but it also raises serious privacy issues.

Well, Facebook has blinked. Now, the company will provide an opt-in option to its users.

All in all, I think it's a smart move and should help quell some of the protest. However, it's likely to make it tougher for Facebook to crank out more money for its investors -- such as Microsoft (NASDAQ: MSFT) -- that have valued the company at frothy $15 billion. No doubt, the money-privacy balance will be a continuing struggle for the fast-growing website.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

Facebook presses the undo button originally appeared on BloggingStocks on Fri, 30 Nov 2007 12:33:00 EST. Please see our terms for use of feeds.