Call me a cinic, but suggesting that we shouldn't be concerned by saying "It is also stored securely on our servers using industry standard firewall technology" seems somewhat naïve. As if that means that our data was adequately protected from prying eyes...
I'd be impressed if they'd turned round and said "We realise it looks like we were trying to expand our business off the back of your private data, and have therefore decided that in our next release we will stop uploading user's contact details altogether. We'll make our social network so compelling that it'll go viral without abusing your privacy."
There's a lot to be said for that. For small businesses that will be predominantly marketed online it makes sense to choose something that communicates what you do. If you've got a massive PR budget, I think the rules are slightly different.
Have you tried getting a genius bar appointment at the weekend in London? It's not easy. Also, it's still work if you're self employed, and your time has a value.
It's great feedback for people who are interested in attracting more people to their project, which is clearly (to me, at least) the manner in which it's intended.
I'd be impressed if they'd turned round and said "We realise it looks like we were trying to expand our business off the back of your private data, and have therefore decided that in our next release we will stop uploading user's contact details altogether. We'll make our social network so compelling that it'll go viral without abusing your privacy."