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Facebook: $100 Billion IPO. Almost 1 Billion Users. You Do the Math.

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May 16, 2012

The big news in the business world this week is Facebook’s ongoing Initial Public Offering, where the company is selling shares to the public based on an estimated value of around one hundred billion dollars. [Or, as Dr. Evil would say: one hundred billion dollars.]

Where does that kind of valuation come from?

Certainly, some of it comes from Facebook’s infrastructure and employees. But most of that value comes from Facebook’s users. Investors are willing to put a price tag like that on Facebook because close to a billion people around the world connect and share with others through Facebook. These investors hope that Facebook will be able to turn its “trove of data” about its users into advertising and other revenue.

The question is: will Facebook generate revenue while respecting privacy and protecting user data or by abusing its most valuable asset?

As the New York Times puts it, Facebook needs to “better match ads to people” while it “avoid[s] violating its users’ perceived sense of privacy.” That’s an odd way of phrasing it, though: suggesting that it’s only users’ perceived sense of privacy in play makes it sound like there’s nothing more than hurt feelings at stake. But with the wealth of intimate information that Facebook collects directly and indirectly about its users—from sexual orientation to religious beliefs to current location—the potential to be involuntarily outed, stalked, harassed, or profiled is very real.

And Facebook doesn’t have the best record of protecting this information. In particular, we’ve called on Facebook to close the “app gap” that allows third party apps that a user doesn’t run herself to access her data without her knowledge, but that’s one of several privacy concerns that remain unaddressed. As a result, recent polls find that a majority of Facebook users don’t trust the company to keep their information private. Not coincidentally, the same poll shows that most users rarely or never click on ads on Facebook and wouldn’t feel safe making a financial transaction through Facebook.

That’s why this IPO is an opportunity not only for investors but for Facebook users too. Facebook is now accountable to its shareholders to generate a return on their investment—but it can only do so if users trust it enough to continue to make it a part of their online lives. So the IPO is a great opportunity to pressure Facebook to protect what makes it so valuable: its users’ data.

We need to keep pushing Facebook to protect our privacy by giving users better control of the information that is shared with third parties and with Facebook itself. We have an online petition demanding that Facebook take steps to better protect our personal information.

And after you’ve signed it, you might even share it with your friends on Facebook…

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