Facebook’s IPO Draws Attention to Business Model, Privacy Issues

May 16, 2012

With Facebook's impending IPO approaching growing closer, the social media site has announced it will be offering over 421 million shares of stock in the company, according to the Washington Post. Founder Mark Zuckerberg will be selling 126 million personal shares which will lower his post-IPO voting power slightly.

But with this significant IPO, Facebook's business model and privacy issues are getting more scrutiny. According to CNET, there's a question as to whether an internet company that relies on displaying ads can really be worth the amount Facebook is being offered for.  Also, Facebook has been working to make its privacy policy more transparent to calm possible investors concerned about how Facebook uses the data it collects on users.

Facebook's chief privacy officer Erin Egan said that Facebook has made efforts to make clarify how Facebook uses data when people using the site while trumpeting new privacy settings. She wrote in a blog post, "We're adding more examples and detailed explanations to help you understand our policies.  For example, we include additional tips, marked with a light bulb so you can find them easily.  We've added new links to our Help Center.  We created a new section explaining how we use "cookies" and similar technologies and updated the corresponding explanations about cookies in our Help Center.  We also provide more information about how we use data to operate Facebook, to advertise, and to promote safety and security for Facebook users."