The Facebook IPO: What it Means for the Average User

(Since I was a little unclear on the ABC news clip, I thought I would clarify what I was trying to get across. This might turn up in a local newspaper as an opinion piece (we’ll see). Meanwhile, you guys get a sneak preview.)

While you may have been inundated with press reports, Twitter updates and even Facebook status updates on the upcoming Facebook IPO, you might be wondering how it might affect you, the average user. If you don’t trade stocks and you don’t “play” the market, should you even care?

The answer is yes. Despite the fact that their future innovativeness has been questioned, Facebook has become a regular stop for almost everyone’s (and their mother’s) day-to-day internet usage. At last count, the number of daily active users was 526 million. The number of monthly active users, that is, people who stop there at least once a month, is just under 1 billion (901 million), which is almost 15% of the world’s population. It is expected to continue to grow, at least in the near future.

While it is a successful company, Facebook is essentially a one-trick pony. They are not known for their innovativeness; their strong suit is the ever-increasing user base. The fact that you, your friends, and your mom, check in to Facebook regularly ensures that more and more people will do it. Though the service has no monetary costs, it comes to you at the cost of your privacy.

The large user base, and its high level of entrenchment, make the site a veritable gold mine for advertisers, game designers and other corporate interests. This has also resulted in other sites being linked to Facebook, and some that in fact now require you to have a Facebook account to log in. This happened to later adopters of the music service Spotify, and you can expect many more services to follow suit. This will mean even more users signing up for Facebook, when they want to use these other websites.

This ubiquity drove the stock price up to a pre-IPO $38, and it will most likely go up further than that. Whether it will remain at that level over the long term is anyone’s guess, but as Facebook’s user base gets larger, so will its number of investors. They will pressure the company to drive up its  bottom line.

It is unclear as to what the company can do apart from selling your data, and even their success at this has recently come into question. For example, General Motors just pulled ten million dollars worth of advertising from Facebook because they questioned the impact of their ads. Also, Google is much better-known for the way it utilizes user data than Facebook. So as investor pressure increases down the line, what else can they do? Another potentially likely option for the company is to start charging for the smaller in-house services like messaging.

At this point, the future of the Facebook user seems darker than the future of the Facebook stockholder, and it might make more sense to buy the stock, but delete your Facebook account. Ordinarily, one might say buyer beware, but in this case, user beware is more appropriate.

 

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