In the tech world, we have a bad tendency to view the concept of "private" as a single bit that is either 0 or 1. Either it's exposed or not. When companies make a decision to make data visible in a more "efficient" manner, there is often a panic. And the term "privacy" is often invoked. Think back to when Deja made Usenet searchable. The term is also invoked when companies provide new information to you based on the data you had previously given it. Think back to the shock over Gmail's content-based ad delivery. Neither of these are about privacy in the bit sense but they ARE about privacy in a different sense.Link
Privacy is not simply about the state of an inanimate object or set of bytes; it is about the sense of vulnerability that an individual experiences. When people feel exposed or invaded, there's a privacy issue.
What happened with Facebook was not about a change in the bit state - it was about people feeling icky. It made people felt icky for different reasons - some felt it for the exposure while others felt it for the invasion. Let me explain.
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