Facebook goes public, will profit with our private data

It is a comfort to my envy directed at those who made billions off yesterday’s Facebook IPO that eventually they’ll lose much of it.

Sure, they’ll still be rich, but they’ll be some rust spots on that technological bubble.

The long anticipated - so long I can’t remember when it started - entry of the social media monolith into the Nasdaq stock exchange on Friday means the company is valued at a staggering $117.7 billion.

Shares that started trading at $38 each and jumped 13 per cent when they went on sale to $42.99, before dropping back down to just above their entry level.

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[caption id=“attachment_314540” align=“alignleft” width=“380” caption=“Can I get my data back please? Facebook listed on the Nasdaq stock exchange yesterday. Reuters”]  [/caption]

All the employees of Facebook, and especially founder Mark “he’s only 28” Zuckerberg, are now crazy rich. That is unlikely to change much, despite the future of Facebook. And that future really is questionable.

Having tried to make money off the web myself, I often wonder how exactly it’s possible. With something like Facebook, it seems even more unlikely they can possibly live up to expectations. And if share values don’t go up, they sink with the consistency of gravity.

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Shareholders demand profit margins. Even if Facebook somehow signed up every human on the planet, they would still run out of people eventually, or at the very least their numbers would peak. The number of users, according to Facebook, is still climbing, there’s no denying it.

But every tech firm reaches a plateau at some point and has ’re-imagine’ its purpose. Myspace. Bebo. AOL.

Already a “pay to be popular” feature is being tested on Facebook in New Zealand.

That’s not free speech in the “democratic internet” theory of 21st century free speech - that’s capitalism.

If Facebook thinks people will be willing to “pay to post” or pay to ensure their friends read their statuses, they are destined for disappointment. I’m a newsman and I’m still unwilling to pay for access to the hallowed New York Times since they put up a partial pay wall.

I’ve simply started reading other sources of news and try to keep the NYT for special occasions. . . 10 times a month or less. Once you give something to people for free, it’s very difficult to get them to start paying. That’s why file-sharing sites such as The Pirate Bay still have healthy followings, and why newspaper sales continue to plummet in the western world.

Nobody can be in any doubt that Facebook makes more than enough money to keep staff employed and Mark Zuckerberg et al in comfortable lifestyles.

If they try too hard to monetise the site to guarantee profits for shareholders, they might find they don’t carry the brand loyalty they once did.

Virtually simultaneous to the IPO, Facebook was sued in federal court in San Jose, California, with plaintiffs arguing the firm “improperly tracked users even after they logged out”, according to Bloomberg .

Everyone loves to sue in America, and that’s not new for Facebook, but now that they’re a public firm, their share value can be hurt by such lawsuits. That’s business baby.

Facebook’s success will depend entirely on their ability to make money out of the endless private data their users upload. Shareholders will hold them to account and expect - if not soon then eventually - that that private data is exploited, somehow.

Then you get potential problems arising. If Facebook makes money from ads that are tailored to your private information and thoughts posted daily, are you entitled to some of that money? If you never click on those ads, thereby effectively getting the service for free, do you end up breaching a contract?

But Facebook isn’t a service. We, the users, are the product. And we’ve just been sold for billions.

The free flow of ideas is mostly a myth, as evidenced by Sonia Gandhi’s textbook removal adventure this week , or Google’s algorithmic and predictive choice of what you should be looking for.

Everyone notices the advertisements on Facebook - there is no pretending it hasn’t been a commercial enterprise for years. But because it is free at point of entry, we don’t notice. We feel we have control over it, that it’s our personal space, with our pictures, memories and essentially a digital biography of life, thanks to the “timeline” feature. Occasionally, when Facebook tries to change its privacy settings or people realise their information is actually owned by Facebook, we raise a small voice of dissent. And then we go back to posting pictures from the wedding we just attended.

Facebook has successfully enticed nearly a billion people into its platform, one of the most successful online ventures ever. It’s IPO was the third largest in US history, behind Visa and General Motors.

Ironically, as much information as Facebook wants you to divulge online, its founder is such a recluse that he couldn’t even turn up in person in New York to ring the bell at Nasdaq before the IPO.

That should be a gentle reminder to all of us who swim through the endless twists and turns of each others’ lives on the social media site: generally, creators are far more interested in seeing their children leave home and make money independently, than to actually being open and supportive ‘friends’. Zuckerberg isn’t your friend, even if you’ve ’liked’ him on Facebook - he’s the billionaire who just made a killing of owning your information.