Facebook looks set to scale back its advertising ambitions after one of a suite of new features aimed at milking cash from user data was slammed as creepy.

The system, known as "Beacon", was only launched on 7 November. It's designed to follow users who click on third party ads inside the social network to outside seller sites. It then reports what they have bought back to their friends in the hope it will be seen as a "trusted recommendation".

Beacon currently has an obscure opt-out, and only on a case-by-case basis. BusinessWeek now reports that this will be changed to an across-the-board opt-in and announced as soon as later today, effectively killing off the wheeze.

Last week, US civic activist group MoveOn scored an easy PR win by pointing out that Beacon could easily cause embarrassment for people buying personal items or gifts. The related Facebook group (membership required) has more than 47,000 members.

Facebook PR responded that "[purchasing] information is shared with a small selection of a user's trusted network of friends, not publicly on the web or with all Facebook users".

It's a well known phenomenon that social networks encourage users to be "friends" with people they wouldn't have anything to do with in meatspace, however. See here (third clip) for audio from our recent interview with cultural commentator Adam Curtis on the rebirth of "the public self" - a Victorian concept.

Of course, the decidedly lukewarm reaction Beacon has received from marketeers may have played an equal part in the forthcoming U-turn.

Facebook has a history of pushing its users' tolerance to privacy-busting features. In 2006 it relented in an outcry that its newsfeed, which tells "friends" about your activities on the network, was a stalker's dream. Extensive customisation and blocking options were introduced as a result.

It's part of the social networking cheerleaders' instruction manual to claim that their websites are changing attitudes to privacy and ushering in a new world of openness.

It's a line we've heard trotted out recently from Bebo's Joanne Shields and Reid Hoffman of LinkedIn, who described privacy as an "old man's concern" in Oxford earlier this month.

Facebook's latest apparent climbdown suggests the world isn't quite ready for their brand of privacy-free marketing, however. ®