Facebook: Ready for privacy or profits

What exactly does Facebook have up its sleeve?

If you have been on the social media site lately you have surely noticed founder Mark Zuckerberg’s open letter to the members of Facebook about the forthcoming removal of regional networks from the site and plans to implement changes to their privacy policies.

Here’s the full text of Zuckerberg’s post: http://blog.facebook.com/blog.php?post=190423927130

Once changes are made to how a user sets up their Facebook privacy settings we will have a better picture of Facebook’s intentions in regards to the treatment of members’ information. Unlike Google, Facebook has never pledged to “do no evil,” and now has the vital information of 350 million people at its fingertips.

Looking at the impact of privacy concerns on Facebook, Brennon Slattery of PC World wrote,

“The underlying privacy concerns are justified. Now that Facebook has 350 million users, regional networks have expanded into the millions. Many people either aren’t sure how to change their privacy settings or they do not care, because, as I mentioned earlier, limiting the network of people able to view your profile is just a click away. So instead of schooling its users on how to protect their privacy, and maintaining its credo, Facebook deleted regional networks altogether, a symbolic gesture of closing the gates.”

For a company already looking at a market capitalization of $9.5 billion and an IPO which may be right around the corner, leveraging all of its users’ information would have great financial benefit. Google made its billions by selling ads targeted at searches, but also at Gmail messages. Facebook has a solid targeted advertising campaign already, but the real power for them would come from product and service questions that come up in idle wall conversations.

That’s not to say that Facebook will make it extraordinarily hard for users to clamp down on the messages that they want to keep out of the stream, but like Google and Twitter they have found out keeping that stream open has the most potential for profit.

Where Facebook goes from this point forward will be interesting and not just the growing and growing list of users on its site, but the growing list of potential investors will be waiting to see how practices and profits evolve.

Despite their nearly half-a-billion users, Facebook still has skeptics in the financial world – according to an article from December 2nd’s  BusinessWeek. “We don’t know quite what their profit picture is,” Ryan Jacob, chairman and chief investing officer of Los Angeles-based Jacob Internet Fund, which oversees roughly $36 million in assets and investments, told the magazine.

Privacy, given or not, may open the door a little wider to that profit picture.