Facebook's Going Public: What it Could Mean for You

Let’s face it: most of us are on Facebook. And those who aren’t face pressure to join—not being on Facebook is almost seen as antisocial behavior. We rely on the Facebook to keep up with old friends and new, send out mass messages, and organize events—among many other things. Facebook has always been a private company, but the rumors are growing that it will go public in 2012. What will this mean for users?

It’s not 100% clear—but what is clear is that change will have to come. Facebook may try to raise as much as $10 billion during its initial public offering and may go for $100 billion, according to The Wall Street Journal*. And to keep its investors happy, Facebook would have to continually make more money each quarter than the year before. That would have an effect on the way it operates—and the user experience.

Here’s some speculation about what those effects might be.


More ads on your profile

There’s no way to predict exactly how going public would affect the Facebook user experience. But it’s difficult to say there won’t be any changes.

In order to be successful on the stock market, Facebook must always make money, quarter over quarter. That can put a huge pressure on companies to make decisions that may drive short-term revenue gains, but not be so great for the company’s future. Stockholders wouldn’t have a huge stake in the company’s future ten years down the line, as they can always sell their stocks; they may pressure Facebook to do things like increase its ads in profiles in order to drive short-term profit. Even if it also drives users away over the long term.

Fewer, less frequent changes to the user experience

Not all of Facebook’s changes are popular when they’re first rolled out. In 2006, when the company introduced the News Feed, it was reviled—now it’s difficult to imagine Facebook without it. Still, new changes could produce short-term dips in stock prices—which would bother investors. As a public company, Facebook may have less freedom to make changes to the user experience that could ultimately improve it.

Then again, an alternative argument states that with more money from investors, Facebook would have more freedom to invest in technology and innovation—and customers could see bigger changes ahead.

More privacy issues

One of Facebook’s most valuable assets is that it is a repository of personal information about millions of consumers worldwide. As Facebook faces more pressure to turn a profit, it could face more pressure to make its users’ information available to businesses. Facebook already uses profile information to govern the type of ads you see, but these ads could get more invasive and personalized as businesses learn more about you and your purchasing habits through the site.

There’s no way to predict exactly how going public would affect the Facebook user experience. But it’s difficult to say there won’t be any changes—as the pressures the company faces and its incentives will change. As the company faces shareholder pressure to turn a profit, it’s likely customers will see some big changes in how Facebook advertises to them, uses their information, and rolls out new innovations—to either good or bad effect.

Sources:

Techcrunch: Why Greedy Stockholders and a $100 Billion IPO Could Hurt Facebook
CNN: What Would a Publicly Traded Facebook Mean to Users?
The Boston Channel: What Changes if Facebook Goes Public
LearnVest: Public Company vs. Private Company: What Does it Mean for a Company to Go Public?
Quora: What Will it Really Mean for Facebook to Go “Public”?
*Wall Street Journal: Facebook Targets Huge IPO