My Life Is Your Asset?

 

This February, social network giant Facebook filed for what is expected to be the largest IPO in Silicon Valley’s history. With this $5 billion debut, Facebook’s market value will likely increase to between $75 billion and $100 billion.

To put that in perspective, a market share of this magnitude would place Facebook in a venerable position among some of the most successful companies across all industries. The bookends of $75 billion and $100 billion estimate Facebook to be just above Walt Disney at $71 billion and potentially equivalent to McDonald’s at $101 billion, according to Standard and Poor’s as of Feb. 1. At this valuation, Facebook would be worth dramatically more than eBay and Goldman Sachs, at $41 and $58 billion, respectively. Yet Facebook would still be shadowed by enterprises such as Google and Apple, at $188 and $425 billion, respectively. Although some are skeptical of Facebook’s future success as a publicly traded company, Kevin Landis, the portfolio manager of Firsthand Technology Value Fund and an owner of shares in the currently privately held Facebook, points to the potential of the company: “Facebook will have more traffic than anyone else, and they’ll have more data than anyone else … So, unless they are impervious to learning how to monetize that data, they should be the most valuable property on the Internet, eventually.”[1]

The anticipation of Facebook’s IPO presents an opportunity to reassess how Facebook has realized its standing as an Internet stronghold. For one, the role of its now 800 million users must be acknowledged. After all, their interactions turn the gears of the social network. Nick Bilton lobbies for their cause in his New York Times article “Facebook Users Ask, ‘Where’s Our Cut?’” in which he makes the valid point that “Facebook is the first real social-media public offering, where the content on the site is entirely created by its users.” [2]

Now if one were to appropriate the $100 billion market value to each of Facebook’s 800 million users, the average comes to $125 per user. And clearly, if a majority of those 800 million users are not worth that $125, others have to be worth more. Is personal information really worth so much?

For advertisers, yes — Facebook is a gold mine. Because Facebook provides a platform for liberally sharing personal information, advertisers no longer have to guess what you want — they know. The advertisements that appear on the side of your homepage announcing Bruce Springsteen tickets or car deals are probably a result of you liking Bruce Springsteen on your profile or visiting BMW’s Facebook page. These advertisements suggest that the advertising industry has elevated itself to a standard where access to social networking data is invaluable to the accuracy of advertisement targeting. In a way, by the amount your Facebook information is filtered and processed, your Facebook profile serves as much a consumer profile as a social profile.

Optimistically, I believe most of Facebook’s users are somewhat aware of the applicability of their information to advertising, though it is easy to lose sight of that in the unrestricted efficiency that the site caters to. There is certain magic in the liberal exchange of personal data that defines social networking: Users share data, Facebook receives it, and advertisers sell it. All parties are satisfied.

Advertising highlights one opportunity of capitalizing on the social network, though the potential for opportunities like these in Facebook’s future is hard to predict. The result is that the speculative location of my shared personal information is uncertain. From a metaphysical standpoint, because my personal information is Facebook’s asset, does that imply that when shares of Facebook are publicly bought and sold, my personal information is being publicly bought and sold? One would not like to think so. This is the kind of question users have to ask themselves. Facebook is a new kind of beast, and its users must be aware of the potency Facebook has for valuing their public personal information.


[1] “Measuring a Giant’s Stature,” New York Times, 2 February 2012, sec. 2, B1.

[2] “Facebook Users Ask, “Where’s Our Cut?,’” New York Times, 6 February 2010, sec. 2, B7.


 

 

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