Facebook's IPO, or initial public offering, will lead to shareholder pressure on the firm to squeeze profits out of users' personal data. Google, too, faces more scrutiny as it mines user data even more. Privacy watchdogs need to be on the alert.
If Facebook’s 800 million users were a country, it would be the world’s third largest. That is worth keeping in mind as the social media giant moves to sell stock for the first time in an initial public offering (IPO).
In going public, Facebook will be under fierce shareholder pressure to make big profits from its largest asset: the personal information it collects from 1 in 9 people on Earth. Private data, such as a user’s taste from pizza to friends, will be aggregated and then monetized by selling ad space targeted to each user.
Facebook isn’t a novice in the struggle of Internet companies to balance privacy and profits in data mining. The company often updates its lengthy privacy policies. Facebook can’t afford a rush to the exits if it blunders big time.
Last November, however, the Federal Trade Commission (FTC) forced Facebook to submit to 20 years of independent privacy audits after it crossed a line. And in a new feature called Timeline, Facebook will compile all of a user’s past history into one, searchable place. The feature is compulsory.
It just announced a plan to gather personal data across more than 60 services – Gmail, searches, YouTube, Google apps, etc. – and sell ads targeted to these user profiles. The only way a user can opt out is to stop using Google.