There is a tendency to treat privacy as something that can be added on to a service later, particular internet companies have taken this approach because adding new features is easy, but the approach is risky and can easy damage the brand and change people’s perception of an organisation.
First addressing privacy issues when external pressure makes it necessary, means the service will be widely used at that point and many users and potential users will be aware of the problem. A perception of “this service has privacy problems, better stay away” begin to be build up and press cover will just reinforce this perception – even when an issue is addressed. Words quickly spread on the internet, and the increased user generated content on the internet makes this evermore the norm (blogs, micro-blogs, life streams, forums, comments) plus the the most critial users often are the most vocal in these forums. To make this worse, it takes long time to change people perception. A common view is, one bad service experience takes 22 times of good service experience to undo the damage, I would think similar figures would apply to a perception problems. Privacy issues seems to stay in people mind for longer time than a missing feature do.
The initially lack of good privacy settings in Facebook is a good example of how long time it can take to change the perception in the market if a privacy problem arises. Facebook has done much to address privacy concerns, but many people are still concerned about using Facebook or is only using it in a limited way due to their concerns. I still meet people who think everybody can access your postings on Facebook, yes this can be the case, but privacty seetings can easy be changed. There is no doubt the Facebook brand has been damaged by not having the privacy settings in place from the start.
The view on Google and privacy has clearly changed (not a dramatic change but clearly a shift in the default view) as far as I can see, after the discussions between Google and EU about Google retaining search history. The discussion ended in a way that was acceptable to EU but the perception of Google has clearly changed despite Google making changes – same story, changes made, but perception had already changed and is not as easy to change as it is to add privacy features.