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What Facebook's IPO means for users

Cameron Scott | Feb. 2, 2012
Facebook's decision to become a public company is seen as a bellwether for Web 2.0 stock offerings, but what will it mean for the social networking giant's 800 million users, and for the companies that build third-party apps for the site?

The hundreds of thousands of companies that rely on Facebook's APIs will see mostly upsides from the IPO, industry observers said.

 

 

"The money raised will be beneficial to the whole Facebook ecosystem," says Rebecca Lieb, a digital advertising and media analyst at the Altimeter Group. Facebook will also likely try to secure more partnerships to ensure revenue growth, according to some analysts. Several analysts think Facebook will need to make its APIs more stable; otherwise, as a public company, it may have to disclose execution problems that in the past it might have been able to conceal.

Facebook has made fledgling moves into commerce, and some analysts predict it will move more deeply into that area to sustain future growth.

 

In advertising, Facebook's chief selling point is matching sellers with potential buyers based on personal data. Facebook's culture is "to push the envelope on privacy," Sterling said, and as it looks to maximize ad revenue and offer new services, that tendency may intensify, he said. "But it's kind of an Achilles' heel for them, in that if they go too far they risk alienating users," Sterling said.

 

Others think users may get a bit of a reprieve from Facebook eroding their privacy. Colin Zick, a partner at Foley Hoag, suggests the greater public scrutiny afforded public companies could force Facebook to play nicer with its users. The SEC requires risks of data breaches be reported, for example.

"Facebook already takes advantage of users way beyond what I'd consider acceptable," said Gartner's Blau. But, he said, "they're in the business of making money, and they do that by exploiting all the private data that you and I dump into Facebook every day. I don't think there's any difference if they're public or private."

 

 

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