A couple of years ago, everyone just loved Facebook - Facebook, Facebook, Facebook - everywhere you turned, someone would be yammering on about it. In 2007, Microsoft loved it so much it paid $240 million for a 1.6% stake.
This gave the company a total value of around $10-15 billion. Yet, it remains free to join and raises revenue solely through advertising.
Given advertising on the site is fairly minimal, doesn't it seem strange that the company is valued so highly?
Well, maybe not. In January, Complete.com ranked the top 25 social networking sites by number of visitors: Facebook topped the rankings with 1,191,373,339 visitors per month; MySpace came second with 810,153,536; while Twitter trailed third with 54,218,731.
And, by June, Facebook held over 2 petabytes (PB) of data in its system - equivalent to 40 million four-drawer filing cabinets, packed to the rafters with users' personal data and information.
Privacy concerns
Most people know they can adjust their Facebook settings to restrict what people can see and which people can see it.
But, as Facebook and other sites become more commercialised, questions and concerns about privacy proliferate.
Earlier this year, for example, Facebook tried to amend its terms of use
to allow it to continue storing and using your personal information even after
you close your account.
After a public campaign against the change, the company decided to ditch the amendment.
Still, the damage was done. The company lost a significant amount of public trust.
Commercial exploitation of personal information
Currently, most social networking sites (including Facebook) do not commercially
exploit their users' personal data. But that could change in the future since many reserve the right to unilaterally change their terms of use at any time.
Clearly there is a tension here: as Facebook and other social networking companies become more popular/valuable, the pressure to generate higher revenue by exploiting user data increases; as soon as the public loses its trust in a company, however, it will abandon it in droves - as happened to a certain degree earlier this year with Facebook.
