How Facebook Going Public Affects You

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You’ve probably heard at least a little bit about Facebook planning on taking the company public and offering stock in it.  Mostly, the talk has been centered around how roughly one thousand Facebook employees will suddenly become millionaires and Facebook C.E.O. Mark Zuckerberg will be worth about $30 billion after they go public.  Well taking the company public is going to affect all of 850 million active users and not in a good way.

One of the things I like about Facebook is that the ads don’t really get in the way.  Sure they’re always over on the right side of the page, but I never felt they were very intrusive.  I fear that’s about to change.

From Yahoo! who explains this better than I ever could:

Facebook is going to “sell” users for $120 each

According to their filing, Facebook had 850 million Monthly Active Users (MAU) at the end of 2011. From that user base the company generated roughly $3.7b in revenue, or just under $4.50 for every member. Nearly 90% of this number comes from selling your information to advertisers who, in turn, try to sell you things Facebook says you want.

That may seem like a reasonable trade until we get to the IPO. “If this thing goes public at the price they’re expecting (Facebook) will get $120 per user,” Matt Nesto notes. Said another way, Facebook is going to sell you for 120 bucks. Wall Street bankers will get a cut of this figure, with Facebook getting the bulk of the money. FB users get nothing.

Facebook users are about to become billboards

In the first line of a 2,000 word letter from Mark Zuckerberg, the Facebook founder announces the following: “Facebook was not originally created to be a company. It was built to accomplish a social mission — to make the world more open and connected.”

Noble stuff from a guy about to be worth nearly $30 billion. Regardless of the original inspiration, once Facebook goes public Zuckerberg’s job is to create value for shareholders. That means getting more than $4.50 a year for selling each user’s information to advertisers. One of the ways Facebook is going to go about this value extraction is turning your every click into a sponsorship.

If you feel exploited now you ain’t seen nothing yet. Post-IPO, everything you “Like”, suggest or link is going to be packaged and sold. Anyone you “Friend” will be pitched stuff you like. People with whom you have common friends will be sold goods on the basis of your unwitting recommendation. You won’t just be connecting with people anymore, you’ll be infecting them with spam, pop-ups, and network.

If that sounds something like a social disease it’s because that’s exactly what it is.

Yikes.  So what does this mean exactly?  Will we see ads in our news feeds?  Are there going to be ads popping up while scrolling through someone’s photo album?  I guess we’ll find out, but this feels like another moment when people will get really mad at Facebook.  Maybe Justin Timberlake isn’t quite so dumb for trying to bring MySpace back.

[via Yahoo!]