The Great Facebook Bubble is set to expand to Rabelaisian proportions with the social media giant’s IPO, which is expected to come early February. In the process, Facebook has been courted by investment banks Goldman Sachs (which invested $450 million in early 2011) and Morgan Stanley, with the latter apparently trumpeting that they now have the edge in the Facebook sweepstakes.
For those who are a little confused as to why Facebook would go public, it usually comes down to the fact that initial investors want to cash out (sell stock), the company wants to get a massive infusion of investment capital, and, once the 500 shareholders threshold has been reached, a company is forced to file papers with the Securities & Exchange Commission (SEC). All of this is currently happening with Facebook.
The IPO will only be made available to top-flight investors, so don’t think for a minute that you, in your modest ranch home in Arizona, will be able to buy stock in Facebook. A nice racket is just about to get launched, and all we can do is watch.
But there is something that we can expect to get from the Facebook IPO: a massive increase in user data mining. In other words, expect Facebook, with both new and old investors to please, to devise increasingly more innovative means of collecting user data to sell to advertisers and, a bit more ominously, to share with the government.
It’s not for nothing that WikiLeaks’ Julian Assange called Facebook “the most appalling spy machine that has ever been created.”
As with any large company, and more particularly with publicly traded companies, there is an incentive (some might call it a psychotic incentive since it’s rather divorced from the realities of this world) to grow companies to immense proportions so that investors can sell stock and cash out, thus allowing others to come in and repeat the process ad infinitum. This will most certainly hold true for Facebook.
And the only way that Facebook can grow is to more effectively gather user data to sell to advertisers. Facebook does not deny that this is their business model, so this is not hyperbole. And since Google announced last week that it was distilling the privacy policies of 60 of its services into a single policy—an information exchange to build detailed internet user profiles—Facebook will be forced to compete with its Silicon Valley rival.
The last few years have seen the opening salvos in this escalating data mining arms race between Facebook and Google. It will only get more intense, resulting in incredible amounts of internet user espionage from both tech giants.
Be sure to empty your browser caches, folks, and investigate more ways of limiting the degree to which Facebook and Google can follow you around the internet.
[Image via Charis Tsevis, Creative Commons license]