Facebook and Privacy, a David and Goliath Moment?

I’m fascinated with issues of privacy in the modern world.  It stems from a great class I took at Bowling Green that used a textbook written by Esther Dyson from the Electronic Frontier Foundation, called Release 2.0.

I read this article today from Matthew Ingram over at GigaOm about Facebook and their ongoing privacy foul up.  I think there is a great potiental David versus Goliath moment that could be coming in the social network space.  Most of the new innovation seems to be focused on converging your social stream, even building personal CRM apps like Gist.  But there could be a chance to go after Facebook right now, in what could be their weakest moment, by attacking the privacy issue.  In fact, MySpace is already trying, but we all know that ship has sailed.

The argument that privacy is killing Facebook is too dramatic, I believe.  The vast majority of Facebook’s 500 million users really don’t understand or care about any privacy concerns.  Like Mark Cuban said, you signed up for Facebook to post pictures and personal data, get over it.  But there is a small contingent of users who are generally concerned, and another small number that see the flames being stoked by the tech media and react to it with no real understanding of the issues.  There could be an opportunity here for someone to come along and offer the privacy secure option for Facebook and steal away a good chunk of users.  Now, of course, by adhering to strict privacy, how could the new site ever make any money?

UPDATE: Furthering my point!