Facebook IPO: Could it backfire if users revolt?
The Facebook IPO will make some people very rich, but social-media experts suggest that it could force Facebook to put profits over user experience – and that could cause problems.
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What is not yet clear, is what the transition means for anyone who isn’t part of the mutual funds, hedge funds, and private equity firms expected to make this the largest Internet IPO in history. Or for, say, the 800-million-or-so Facebook users.
But social-media pundits suggest that Facebook's shift from private to public ownership might not bode so well for the average Joe on the Internet.
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The need to justify a valuation rumored to be as high as $100 billion has led to no shortage of speculation as to how Facebook “plans to extract money from users,” says Yahoo! Finance expert Jeff Macke via e-mail.
The most likely way for Facebook to go about it is using personal information, he says. Facebook could sell access to users' selected preferences or networks and acquaintances to help businesses offer “personalized” goods or services, such as: “80 percent of your friends enjoy Coldplay, available via Facebook cloud.”
If Facebook users were to see such offers as a breach of privacy, Facebook could “experience some degree of user revolt,” says Mr. Macke
As it stands, most Facebook members leave the service simply by ceasing to use it. It's possible that if the company gets more proactive in creating revenues, Macke adds, “customers will leave more noisily and in greater numbers.”
Facebook is already facing increasing competition. “People have no particular loyalty to Facebook when new things come along,” says Mark Tatge, a journalism professor at DePauw University in Greencastle, Ind., pointing to the rapid growth of Google+ and Twitter. “Many users are simply moving on.”
As Facebook rolls out new features to persuade readers to choose Facebook over the competition, aggressive tactics could backfire, he says.
“The company has tried many new things recently,” he says, pointing to such items as Timeline. “More and more complicated add-ons is not what users want.”