With talk of a $100 billion Facebook IPO in the air, frenzied investors should ponder the legal and public relations difficulties that a far more experienced and financially successful company is having expanding its own advertising-based business model. Last week, 26 states filed suit against Google over new search-engine policies that could further compromise the  privacy of users. This would be in sharp contrast to the image Google has carefully cultivated of a company that zealously guards privacy rights. In reality, the search-engine giant would continue to expand its data collection methods to ferret out every fact about each of us that could conceivably be of value to advertisers.  And of course, this capability becomes literally boundless in Android-based phones, since they allow Google to track not only one’s browsing history and habits, but also to map a permanent record of the stores, restaurants and other locations that one might visit over the course of a lifetime.
Facebook desperately wants in on this action, since its revenues so far amount to only a small fraction of what Google has been raking in. Under the circumstances, and with a reported 850 million pairs of user eyeballs to monetize, it is a given that Facebook’s data-mining methods will grow more aggressive and intrusive over time. So far, though, the company hasn’t even scratched subscribers’ figurative corneas. Would you believe the company doesn’t yet have a model for phone-based advertising? That’s because the ads themselves – ads designed like those that currently pop up on Facebook pages – would lose their impact if downsized for cell-phone screens.
Docile Shoppers
An even bigger problem for Facebook’s ambitious 800-pound-gorilla-of-a-business model is that more and more firms are finding increasingly sophisticated – if not to say, insidious – ways to hit us with advertisers’ messages, including via GPS tracking.  Zuckerberg and Wall Street may be drooling over the prospect of turning 850 million Facebook users into docile shoppers, but at some point our susceptibility to subliminal and individually targeted advertising is bound to hit a wall. Indeed, there are already so many commercial messages bombarding us from so many directions that they are becoming a major source of annoyance. This suggests that people will increasingly support “privacy” laws whose main purpose is to wall out the Mark Zuckerbergs of the world.
Concerns about privacy will mutate into anger as internet users become increasingly aware of the voluminous amount of personal information that is being collected on them online and used by advertisers to microscopically adjust their crosshairs. They are already so good at this that Target stores, for instance, applying sophisticated algorithms, can tell whether a woman is in her first trimester of pregnancy based on what she has been buying lately. Pretty creepy, really. It’s one thing to have a Preparation-H ad smack you in the face when you flip through the pages of a magazine, but quite another to have a suppository coupon pop up on your Facebook home page because you bought a bottle of witch hazel the day before. Advertisers have grown too clever for their own good, really, and for Facebook and other purveyors of social networks, this spells an uphill battle in their attempt to exploit to-the-max the thick dossier they are now able to compile on each of us. It must be conceded that, short of spying on people in their own homes, a better instrument for doing this could hardly be conceived than Facebook. And that, ultimately –$100 billion capitalization aside — could prove to be the firm’s eventual undoing.
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Things tend to evolve and those in positions of power and responsibility are initially conservative, but when provided an opportunity become opportunistic. Doesn’t matter whether it’s government or private enterprise.