Facebook IPO: Why Your Data Is Worth $104 Billion - millergooft1986

"If the product is loos, you are the product."

At first glance that bittie maxim might seem cabalistic, only information technology's an liable description of the nature of Facebook's service, and a needed heads-up for anyone WHO uses it. Although Facebook is a free religious service, the social networking site acts as a mechanism for capturing highly subjective substance abuser information–Facebook's literal product. That's your information. You are the mathematical product.

All of the discussion and guess close the Facebook Initial offering over the past month has served as an introduction to the new "personal data economic system" for many people. Facebook–and a thousand other smaller companies corresponding it–are in the business of collecting and monetizing personally identifiable information (aka PII).

Facebook is already doing good business in taking advantage of this data to target ads connected its own site. If you mention the Dallas Cowboys in one of your updates, for example, you may see an ad for the team's paraphernalia.

Few months from in real time, however, when the glow of the IPO has attenuate, Facebook's shareholders will exist asking Facebook what it can do to increase revenues from existing businesses, and how it fanny develop new revenue streams.

Facebook IPO: Why Your Data Is Worth $93 Billion

And that's when things could get really interesting from a privateness perspective–and, potentially, same life-threatening. As Facebook nears 1 billion users, the mountain of highly detailed grammatical category entropy the company is sitting on is bigger than anything ever amassed by any fellowship or government in chronicle. The fact that that huge store of data is in the hands of a Pres Young, private company run by a 28-year-old billionaire is, well, a sign of the multiplication.

I'm not blowing the horns of doom here. In fact, scorn a number of unexpected moves to make more user data "semipublic," Facebook has unbroken its promise not to sell or license large chunks of its elite graphical record to marketers and advertisers. Information technology has likewise made a number of changes to its service that give users more than hold over privacy, such as the ability to determine who (friends, friends of friends, operating theater everyone) sees each and every piece of content.

But Facebook has also continued to make moves that make you wonder where the company really stands on privacy. It has been tardily rolling kayoed seventh cranial nerve recognition technology that could identify users and automatically attach their names to photos in which they appear–without their knowledge or consent. The addition of the millions of photos Facebook bought in its acquisition of Instagram only adds to the vex over automatic face recognition.

Following New Gross Streams

Going public can have a dual effect on companies. Admittedly, they do become Thomas More accountable and transparent because of the filings they must make with the SEC. But those filings dismiss also offer investors more information happening receipts streams that are not in latest development, bounteous the investors more fodder to put pressure connected the company's board to start development, pronto.

For instance, in recent weeks Facebook has reported in a serial publication of SEC filings how it has largely failed to hit money from its mobile app, which nearly fractional of the companion's exploiter base enjoys. Investors, of course, volition view this As money left on the table (money gone), and will postulate action to spring up that teem. Development could come in the form of motorized ads or "paid updates" on the mobile newsfeed. So much an effort would annoy users and cost them a bit of their metre, but it would probably non cost them their privacy.

That's just indefinite example, though. The pressure to make more frank use of the personally identifiable data in Facebook's servers will constitute goodish all over the next few months and age, especially if Facebook's existing revenue streams hit tight multiplication, or if the Mary Leontyne Pric of the shopworn falls sour. Throw no fault: Marketers and advertisers would love to get their manpower along the ad-targeting data that Facebook has amassed.

Facebook's direct strategies for pumping upfield revenues will likely include selling ads (in various forms) on Facebook Mobile, and placing ads for clients happening other sites outside of Facebook.

The latter strategy will transubstantiate Facebook into a large ad network. A accompany such as Ford, for representativ, might approach Facebook and buy an audience of Facebook users who have either discussed new cars on Facebook or visited car sites more or less the Web. Facebook would know WHO those users are, because the cooky it drops in users' browsers would report that information bet on. Facebook would then design a highly targeted ad campaign in which it places Ford ads on Facebook and at spouse sites around the Web where information technology knows potential cable car buyers may visit.

But that strategy might not be enough. Facebook volition soon reach a billion monthly users, a staggering number, but its growth is due to slow way fine-tune soon. In most of the industrialized world, everybody already knows about Facebook, and anyone inclined to sign up has already done so. Much of Facebook's current increase is coming from poorer countries some the world-wide, and soon justified those new markets will cost tapped.

Today Facebook makes about $5 from each of its users, while Google makes $30. IT's improbable that Facebook will push that $5 number improving on the strength of its existing clientele. Investors volition look to Facebook to make Sir Thomas More from the users it already has.

Holding Facebook Accountable

We consumers accept to keep an eye on Facebook as information technology announces new businesses. (See "Protect Our Data! A Digital Consumer Bill of Rights" and "A Bill of Rights for Facebook Users" for related give-and-take.) The enticement to deed user data in ways that gnaw privacy will always be present. Evenhanded by joining Facebook, we tacitly approve of the company's leveraging of some of our information–key out, interests, friends, and so connected–only we postulate to make sure that the different information or media we keep at the site remains out-of-bounds if we have marked it every bit cliquish.

Facebook will retain to push people to become to a greater extent social, to share more individual data. The company believes that a cognitive content shift away from the expectation of online concealment is taking set back, and it wants to do everything it behind to evangelize for that.

I'm non sure the great unwashe are buying it, though. Consumers are already ill at ease with Facebook and its business. Only 51 percent of people surveyed in a recent AP/CNBC poll expressed a positive opinion of the company, while 71 pct had a favorable notion of Google.