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A publicity stunt had been revealed that outs Facebook as the chief instigator in a campaign to smear Google (NASDAQ: GOOG). USA Today reported that Sheryl Sandberg, a veteran executive hired from Google and now COO of Facebook gave the green light to launch an ad campaign against Google.

The Daily Beast broke the story that Facebook had hired a public-relations firm to insert negative stories into the mainstream media that allege Google’s Social Circle had violated user privacy laws and potentially even violated federal regulations. Social Circle is Google’s social networking idea still being formulated.

USA Today contributors took on the claims being made in the media and concluded many of them were not true. The Daily Beast reporter Dan Lyons then went out to investigate where the anonymous story tips originated leading back to Facebook as the instigating culprit.

Facebook will now have to answer for the publicity stunt gone wrong. They released a statement claiming their ‘smear’ campaign of Google’s Social Circle site was not authorized nor was it intended to harm Google and offered more information about their collection of information on the Social Circle website which is only available to users that have Gmail access.

The company that pushed the publicity for Facebook, Burson-Marsteller also released a statement confirming Facebook did hire the firm to represent their intention to explore the issues surrounding Google’s Social Circle site. The PR agency also contended what Facebook did was against the company’s policies and said the assignment should not have been accepted in the first place.

Tech watchers will now be waiting to see how this war of words plays out. With Facebook set to go public next year and generate more than $4billion in advertising revenue during this year, it brings in to question how the company really operates internally. There are no reports of how this stunt will affect either company just yet but most watcher anticipate Facebook’s Sandberg having to step up to the plate and tell the truth to keep Facebook from gaining a ‘plays dirty’ reputation.