Mr. Kelly assures that Facebook will address New York's concerns by making it clear to users that certain online actions they take would allow the site to use their faces in advertisements.
But whose rules govern US websites in other countries? There's no international equivalent to the Commerce Clause, so foreign judges apply local law.
Such a ruling caused a YouTube blackout in many parts of Brazil earlier this year. Supermodel Daniela Cicarelli sued the American video-sharing site in a Brazilian court, claiming that a steamy clip of her and banker Renato Malzoni that had popped up on the user-driven site violated her privacy. A court ordered YouTube to prevent the popular video from reaching computers in Brazil and demanded that some Internet providers block access to the entire website until YouTube could put an effective filter in place for that one video.
"There is no way to stop a similar lawsuit in the future," says Mia Garlick, product counsel for YouTube. "Different countries have different standards for privacy.... And it's obvious that you can't be on top of all the laws."
In June, YouTube took a step toward mediating the problem by rolling out localized versions of the site. There are now 18 different YouTubes, including one for Mexico, several in Europe, and a Brazilian edition. Each is translated into the local language and tailored to reflect the countries' attitudes on privacy, copyright, and decency, Ms. Garlick says.
For example, the Taiwanese YouTube, which opened last month, has a broader definition of what's racy or violent and locks such videos behind an age-restricted part of the website, she says.
"Anytime a company has a major presence in another country, they should open a local site," says Ian Ballon, an Internet law expert who works with companies to develop international strategies. But taking that step can be a hard sell for small Internet start-ups, and for some large companies as well, he says.
"In 1999, I walked through these ideas with the general counsel of a substantial software company," Mr. Ballon says. "He looked at me and said, 'That's ridiculous.' Now, a number of lawsuits means that that attitude has subsided a bit, but there is still that cowboy mentality."