Facebook IPO as a measure of social trust

Facebook's 900 million users are a trusting lot, in each other and Mark Zuckerberg. The Facebook IPO on May 18 will be a rare measure of trust in this one-seventh of humanity.

Eduardo Munoz/Reuters
Facebook Inc. CEO Mark Zuckerberg is escorted by security guards as he departs New York City's Sheraton Hotel May 7. Facebook Inc kicked off its IPO roadshow in New York on Monday, attracting hundreds of investors.

Starting May 18, anyone will be able to buy shares in Facebook. It may be the largest initial public offering (IPO) in history.

The social network giant predicts its value will be about $100 billion. By comparison, Google’s stock debut came in at $1.66 billion.

Not bad for a company started only eight years ago by a young Harvard student, Mark Zuckerberg.

But the stock sale will be more than a measure of Facebook’s worth. It will also be a rare measure of how much trust exists among a seventh of humanity.

More than half of all Internet users are on Facebook. That’s more than 900 million members. They all trust their “friends” – about 139 on average – with personal information, such as dating habits, health conditions, or intimate photos. Many open their page to anyone.

And they all trust Facebook Inc. with that information.

The company’s promise to potential shareholders is that it will make lots of money by targeting ads to users based on their personal data, even each user’s whereabouts or recently visited websites.

With this stock sale, many investors are asking a tough question: Will all that trust evaporate someday, especially among users who are “creeped out” by ads that seem to know them so well or that suddenly join a Facebook conversation? If so, Facebook’s advertising earnings would evaporate, too.

Many users now reveal a wariness about being so open to “friends,” many of whom aren’t really trusted friends. A new study by Consumer Reports finds that a quarter of them lie about their information. And that proportion has doubled in the last two years.

And yet more than a quarter of those on Facebook share their wall postings with people who are not “friends.” About 13 million never even set the privacy controls – which are difficult to find anyway.

So this historic IPO will be a grand measure of trust between Facebook users as well as their trust in Facebook’s privacy practices and its aggregation of personal data for advertisers.

Many experts try to measure trust in a society. Gallup looks at major institutions, such as the military or Supreme Court. A new global survey of trust in advertising by Nielsen shows only 31 percent of North Americans trust ads placed on social media like Facebook.

A general measure of trust is how much people freely share information and make themselves vulnerable to each other. Facebook is a testament to that.

In his 1995 work “Trust: The Social Virtues and the Creation of Prosperity,” American scholar Francis Fukuyama makes a case that societies with the highest level of trust among strangers can achieve better global competitiveness. The more that a nation shares common values such as honesty and openness, the more it can thrive.

Moral and spiritual capital is thus the basis for physical and financial capital.

The Facebook IPO will give us a window into this bit of wisdom.

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