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The thing that stuck out to me is their move to try and group friends and what they're doing based on location. They already have the ability to add your location on the status updates, and this kind of takes it to another level. Is it just me or are they moving to try and directly compete withe companies like foursquare and other companies like that?
I hope i got this right. Its possible to create a list and they will automatically put friends inside this and suggest other people who could match too?

But they do not force this upon me or change existing lists.

There are two types of lists based on how they are managed - smart lists, and standard lists.

Smart lists are built based on information you provide - the places you worked, where you went to school, where you live, and your family. These get maintained automatically - when you become friends with someone who lives near you or who went to the same school, they will be added to those smart lists. Same thing if one of your existing friends adds new information such as what school they went to, or if your friend moves to a new location. You can also manually remove and add people to these smart lists.

Standard lists (ie, the type you have right now) are entirely managed by you.

When managing either type of list, you will get suggestions for who to add to the list.

It's only going to take a few instances of the algorithm guessing wrong or users not paying attention and having something bad happen IRL before this bites them. At least with Plus it's still a manual association into Circles, which puts the full onus on the user to do it carefully.
The only lists that are automatically maintained are those for your schoolmates, your work colleagues, where you live, and your family.

The family one is the one where the most sensitive information might be shared, and that requires a confirmation for one of your friends to claim to be in your family. (Or, you can manually add that friend as a member of your Family list, which won't add you as a member of their Family list.)

That makes more sense but I do question the colleagues list, since a lot of people carefully sort which coworkers they fraternize with and prefer multiple lists, especially at large companies.
I always wondered why they didn't just apply a clustering algorithm on your friends to auto-generate friend lists.

If you ever ran one of those "friend wheel" apps, it was easy to see that data about interconnections provides an almost-perfect way to group connections from different facets or stages of your life.

IMHO, cluster algorithm is not perfect, and the penalty for false positive is simply too high. In that sense, a manually devised algorithm would more likely give you a controllable result. I believe that is the same logic why Google was resistant to machine learning algorithms on ranking for the first few years.
The penalty doesn't have to be high: make it easy to bump an 'accidental friend' to the acquaintance list e.g. a context menu on their news entry.
Sort the list by confidence when displaying it to the user, and make it easy to remove members - the potential false positives are most likely to show up with the least confidence.

After that, the incidence of false positives would be very very small.

Plus, what really is the penalty of false positives? FB already surprises people (at times in a bad way) by sharing things in ways they don't expect it to.

lol "major news (i.e. an engagement)"
Facebook has made some weird UI design choices lately to say the least.
Great and all, but I really just wish FB would stop assuming I need the side/chat bar thing. It seems like every 10th visit or so I have to "go offline" and close that damn bar.

I really, really feel that it's being pushed on users for no other reason but to force us to realize that, they too, have a chat feature like Google+.

> While these changes feel like an answer to the rise of Google+, the search giant’s social network, Ross says that’s not the case. “We’ve been iterating on this in the last four years,” he said.

Then this is going to be a revolutionary feature, because four years is a damn lot of time to spend of friends list management.

Just for once I'd love to see a company say "yeah, our competitor released something that really made us get off our asses." It would be something refreshingly close to honesty, and at least in this case the turnaround time on the response isn't really embarrassing.