What Does Facebook Going Public Mean for You?

Consumer protection, Money, Technology

Last week, Facebook went public with one of the largest IPOs in history. The IPO itself was a disaster, with institutional investors pulling out at the last minute due to information about the company that the public didn’t have, so the stock is now worth about 25 percent less than the opening price. Because of the snafu, Facebook faces an investigation and a potentially steep punishment.

The news of Facebook’s shenanigans isn’t much of a surprise to many, however. The company has a long history of putting itself first. Facebook has faced controversy after controversy for its questionable customer privacy policies and user tracking. Facebook is, in many ways, the “Big Brother” watching all of us. So what does the IPO mean for the regular Joe, besides a loss of money for those who invested in it initially? And how will the IPO change things for Facebook’s millions of users?

Ads

Because Facebook is free for users, the way it gets revenue is through advertisements. Now that it’s public, investors will be putting a huge amount of pressure on the company to produce more and more revenue and grow faster than ever. The only way to do that, at this point, is by making room for more advertising on the site. If you think your Facebook feed is cluttered now, just wait until the number of ads on a given page doubles.

You may also begin seeing ads on Facebook mobile sites. Currently, Facebook does not get revenue from their mobile apps, but half of its 900 million users are using the site from mobile platforms. In order to tap those users for revenue, Facebook will have to figure out how to monetize the mobile platforms, which likely will mean ads there as well.

Privacy

All those sponsored ads work best when they are targeted to each user’s preferences, which is where privacy concerns come in. Facebook has access to people’s lives in a way that no other site ever has. Google can give you exactly what you want because you’re typing in whatever that is each time you use it—they don’t have to access your personal info. But Facebook gets multi-dimensional information on the complete lives of its users. Facebook knows who your friends and family are, where you work, where you went to school, what bands, movies, and local businesses you like, where you hang out, your political preferences, your relationship status, and the list goes on and on.

Unless you rarely log on, Facebook has more information about you than any other company in the world. Obviously, they already use that information to place appropriate ads on your feed, but analysts say that they could do much, much more and use more of your data in a way that violates your privacy. While you might not mind that Facebook knows you love shoes and puts Zappos ads on your wall, you might object if they start using your financial or health information. The company doesn’t currently make use of that kind of information, but they could in the future if it means bigger profits.

Content

Currently, most of the content on Facebook is generated by its users. However, experts point out that Facebook has a huge potential for Facebook-generated content, and the pressure to to create ever-greater revenue may be just the thing to push it in that direction. It’s been speculated that Facebook could use its vast amount of personal information about its users to create services similar to Groupon, Yelp, or Craigslist, and make them even more specifically targeted to each user. While it could be a great thing for users, serious questions remain about the data it would have to tap for each of its users to create such a service, and whether it would violate user privacy.