Amid Microsoft Talk, Facebook Dinged Over Sexual Predators

Microsoft’s reported interest in taking a minority stake in Facebook remains just so: reported. Maybe Microsoft wants to make sure it’s not investing in damaged goods before going official.

Yesterday, New York’s Attorney General Andrew Cuomo announced his office is investigating Facebook after discovering “significant” defects in the site’s safety controls and the company’s response to complaints.

In an open letter to Facebook CEO Mark Zuckerberg, Cuomo said that undercover investigators posing as teens on the social network easily accessed pornography and were often harassed by adult members from the site. Investigators, still posing as teenagers or parents, then complained to Facebook — but to little or no apparent avail, Cuomo said.

“Facebook’s promise of a safe Web site is not consistent with its performance in policing its site and responding to complaints,” Cuomo said in a statement. “Parents have a right to know what their children will encounter on a Web site that is aggressively marketed as safe.”

In one instance from the preliminary investigation, a 24-year-old Facebook member asked an investigator posing as a 14-year-old female for nude pictures. After the investigator lodged a complaint by posing as the 14-year-old’s mother, Facebook sent a response, saying it would “review the reported material and remove anything that violates our Terms of Use.” But Facebook never booted the 24-year-old from its membership roles, Cuomo said.

Cuomo’s letter to Facebook, which accompanied a subpoena for documents, come at what may be an inopportune time for the social networking site, as it’s looking for a new cash infusion.

Citing people familiar with the matter, the Wall Street Journal yesterday reported that Microsoft is in talks to purchase a stake of up to 5 percent in Facebook, at a cost in the range of $300 million to $500 million.

Whether heat over sexual predation on Facebook will affect the site’s efforts to raise additional funds remains unclear. Rival social network MySpace is a frequent target for similar scrutiny and even lawsuits, yet even last year, RBC Capital markets analyst Jordan Rohan said the News Corp.-owned property might be worth $15 billion. Microsoft’s investment, if it transpires as reported, would set Facebook’s value between $6 billion and $10 billion.

Facebook can attribute figures like that it to its outstanding membership growth: The site claims more than 42 million active users, and has said that it is growing at a rate of 3 percent per week.

That’s a large crowd to police, however, although Facebook said that it’s doing its best to remain diligent. In a statement e-mailed to, Facebook responded to Cuomo’s letter and subpoena by saying it takes his concerns “very seriously.”

“We strive to uphold our high standards for privacy on Facebook and are constantly working on processes and technologies that will further improve safety and user control on the site,” the statement reads. “We are committed to working closely with all the state attorneys general to maintain a trusted environment for all Facebook users and to demonstrate the efficacy of these efforts.”

Facebook also has said it supports the KIDS Act of 2007, a bill that goes before the House of Representative’s Judiciary Committee this fall. The law would require convicted sex offenders to register any e-mail address, instant message address, or similar Internet identifier the sex offender used or will use to communicate over the Internet with the National Sex Offender Registry.

U.S. Reps. Earl Pomeroy (D-N.D.), Paul Gillmor (R-Ohio), Anthony Weiner (D-N.Y.), Steve Chabot (R-Ohio) and Sens. Charles Schumer (D-N.Y.) and John McCain (R-AZ) introduced the KIDS Act in January. Opponents to the passage of the bill cite the low rates of sex-offender recidivism.

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