Both Facebook and Google have had their share of embarrassing privacy blunders. Facebook had Beacon, and Google had Buzz. But the most recent privacy scandal to make headlines—surrounding a Gmail feature called Social Circles that pulls in data from users' friend connections—has become a scandal about botched PR. Facebook, apparently gunning for Google in an area where it doesn't look so hot itself, reportedly hired PR firm Burson-Marsteller to do its dirty work.

The effort failed when privacy blogger Christopher Soghoian publicly posted the sleazy e-mail pitch he received. In part, the pitch read:

Google is at it again - and this time they are not only violating the personal privacy rights of millions of Americans, they are also infringing on the privacy rules and rights of hundreds of companies ranging from Yelp to Facebook and Twitter to LinkedIn in what appears to be a first in web history: Google is collecting, storing and mining millions of people's personal information from a number of different online services and sharing it without the knowledge, consent or control of the people involved.

In an interview with Ben Popper at BetaBeat, Soghoian said that Google's Social Circle is far from his main privacy worry:

I'm a fairly outspoken privacy advocate and there are many things Google does that are really bad on privacy, but this isn't the thing that is keeping me up at night. It's something that I had never really worried about.

Soghoian told Popper that companies have recently realized that raising privacy issues is a way to score points against competitors. He continued:

The difference is Microsoft can do it publicly, because they don't have their own privacy problems. Facebook is no better than Google on these issues, so to make these attacks they have to hide behind these PR companies. If they tried it in public, under their own name, people would laugh in their faces.

Soghoian suggested that USA Today, which was the first news outlet to break the story, narrowly escaped being duped itself. The suggestion is plausible. The article, which leads with information about Burson-Marsteller, shifts to descriptions of users expressing shock about Social Circles:

Dion Moses, 25, a computer engineer in Ridgecrest, Calif., also wants out of Social Circle. "This is shocking," Moses says. "I had no idea that Google was doing this, and I pay close attention to most technology news sites."

The only way to disable Social Circle, [Google spokesman] Gaither says, is to stop using Gmail.

I'm not particularly shocked by revelations of the smear campaign, though the details are certainly fascinating. As The Register's Andrew Orlowski writes sarcastically:

Newspaper readers will be appalled to discover that a blushing, innocent maiden in Silicon Valley has had her reputation besmirched by wicked rival. Facebook's PR agency attempted to spin a blogger to write an unfavourable story about rival Google.

What's most important is that this story illustrates what a mess privacy is. Social Circles might indeed be something to worry about—if it weren't a minor infraction compared to the sorts of things that are happening all the time. Companies have access to huge amounts of users' personal data, and don't have to deal with much oversight about what they do with it.

Social-media researcher Danah Boyd summed the situation up well in a piece for TR last year:

Privacy is not simply about controlling access. It's about understanding a social context, having a sense of how our information is passed around by others, and sharing accordingly. As social media mature, we must rethink how we encode privacy into our systems.

In a deal that has some experts scratching their heads, Microsoft announced today that it's acquiring Skype for $8.5 billion.

Reuters' Bill Rigby writes that, while Skype's technology was groundbreaking at its height and is still quite valuable, it's hard to see how Microsoft will manage to get its money's worth:

Microsoft is hoping that more business users would be willing to pay for Skype if it is integrated with Outlook e-mail, which hundreds of millions of people already use, or that more gamers will pay to join the Xbox Live network if real-time video and voice services are added.

It should also allow its new Windows Phones to compete directly with Apple Inc and Google Inc smartphones, which already feature video chat.

But some investors carped that Microsoft already had the technology to do this, or should have developed it itself, and may soon be overtaken.

Peter Bright in Ars Technica writes that Microsoft certainly has technology it could have developed into the features it's hoping to get from Skype:

Microsoft's own software already has considerable overlap with Skype. Windows Live Messenger offers free instant messaging, and voice and video chat. It currently boasts around 330 million active users each month, typically with around 40 million online at any one moment. Microsoft has an equivalent corporate-oriented system, Lync 2010 (formerly Office Communication Server) that allows companies to create private networks that combine the communications capabilities of Live Messenger with corporate manageability. The underlying technology of both platforms is common, allowing interoperability between Live Messenger and Lync. The company also plans to integrate Kinect into Lync to create more natural virtual presences.

Even considering Skype's paying users, Bright writes, Microsoft still seems to have paid too much.

USA Today quotes IDC analyst Al Hilwa offering some explanation for the high price that Microsoft paid:

"If Skype ended up in the hands of Google, it might have been able to use it to strengthen its ecosystem at the expense of Microsoft," says Hilwa.

But keeping Skype out of the hands of Google,may have furthered a different company's agenda, says Om Malik of GigaOm:

The biggest winner of this deal could actually be Facebook. The Palo Alto, Calif.-based social networking giant had little or no chance of buying Skype. Had it been public, it would have been a different story. With Microsoft, it gets the best of both worlds: It gets access to Skype assets (Microsoft is an investor in Facebook) and it gets to keep Skype away from Google.

Facebook needs Skype badly. Among other things, it needs to use Skype's peer-to-peer network to offer video and voice services to the users of Facebook Chat. If the company had to use conventional methods and offer voice and video service to its 600 million plus customers, the cost and overhead of operating the infrastructure would be prohibitive.

Malik adds that Facebook could also help Skype garner more users and revenue.

Two leaders of Egypt's youth movement described this evening how they combined non-violent ideals with online social networking to nurture labor and democracy protests over a three-year period, culminating in the massive Cairo protests and the February ouster of strongman Hosni Mubarak.

"Facebook was used--as everywhere else--to exchange photos and other things. We thought we could use it as a political platform," said Ahmed Maher, a civil engineer and a leader of youth movement. He spoke through a translator to about 200 people at an event at MIT's Media Lab

In 2008, Maher and others tried to organize a general strike in an industrial city called El-Mahalla El-Kubra, in part through blogs, text-messages, and a Facebook page. This was known as the "April 6 Youth Movement" because it sought a strike on that date. Their Facebook announcement spread rapidly. "We sent it to 300 members and by end of the day we had 3,000 members. By the end of ten days we had 70,000 members," he said. "People asked 'What can we do?' We said to spread the idea as far and wide as we can."

In May of 2008 he was arrested and, he said, tortured by Egyptian authorities who wanted to shut down the movement and its Facebook platform.

Asked about the role of government in trying to block communication technologies, another organizer, Waleed Rasheed, said: "I would like to thank Mubarak so much.... he disconnected mobile phones on Jan. 27. More people came down to the streets on the 28th of January because he disconnected." By February 1, the protests had swelled to at least 1 million people, and Mubarak stepped down four days later.

The two men said they wanted to now expand their use of social technologies to advance democracy in Egypt, organize political events, and monitor elections. A full webcast of the 90-minute event is expected to be available here within a few days.