Facebook is set to go public. It is estimated to be worth somewhere between 75 and 100 BILLION dollars. This would surely make it one of the most valuable corporations in the world. But, unlike Apple, which creates amazing lifestyle products that enhance the quality of life for millions of people, or Exxon, formerly the world’s most valuable company, that produces a necessary evil, Facebook does not have a widget, product, or inventory. It doesn’t make cars, phones, or provide and service of intrinsic value.
Facebook makes money by selling ad space to companies that want to reach YOU.
Based on your profile, (your interests, your relationship status, age, gender, location, activities, favorite books and movies etc) ads are displayed to you based on relevancy. Every time you click on an ad, Facebook bills the advertiser for the click.
At least with Google’s business model, they give you some really killer products like gmail, gcal, google+, etc… Oh shit! But wait, that means they know even more about US. Our search history, the content in the emails we write, and the sites we visit are all tracked and OUR Internet experience is shaped to best SELL to US.
Have you ever noticed that mysteriously after clicking on an add, or website, all of a sudden everywhere you go you see the same ads following you? Creepy huh? Last year Google made over $36 BILLION dollars selling ads targeted to you, your habits, your digital crumb trail, etc. Google also has a way of doing it in such a way that it is so disarming and actually pleasant.
I am not saying there is anything wrong with any of this… I do however think that we are a little more than naive if we don’t at least KNOW how this this stuff works. If people weren’t about to be making BILLIONS and BILLION$$$$$$ in the upcoming Facebook IPO, I wouldn’t really care that much. Something just seems off with them profiting on something they didn’t actually create.