Facebook faces a dilemma between increasing profits through targeted advertising using user data and respecting user privacy. While advertising is important for revenue, past user data sharing through programs like Beacon met significant backlash for violating privacy. Moving forward, Facebook must find innovative ways to monetize without compromising trust in how user information is used.

1. Facebook’s Dilemma: Profits (theirs) versus Privacy (yours)Milton de Aza 10-0033Esteban Santana 10-0378David Santamaria 10-0047

2. FacebookFacebook is the largest and most widely used Social Networking site in the world; it’s interface is simple and includes tools that allow users to connect.Used by advertisers to reach targeted audiences.Facebook pages by businesses to interact with possible customers.

3. Facebook’s problemVery expensive to maintain since uses upload more than 2 billion photos and 14 million videos each month. In 2008, Facebook sales were about $265 million but were still on deficit.70% of Facebook’s users are out of the US and are unlikely to make purchases.

4. PrivacyThe biggest concern that users have on Facebook.Advertisers want this information.Possible way for Facebook to increase its revenue by sharing this information.Facebook’s dilemma is finding a way to turn profit and increase revenue using its users voluntarily provide without violating privacy.

5. Privacy issuesBeacon program sponsored by major corporations. Customers bought from these corporations and Facebook shared this information with contacts automatically, this was very unpopular.Facebook’s change in policy which made it the owner of all the user content on the site. Users protested until this was taken away.

6. Facebook platformFacebook created Facebook platform in 2007.Enabled the site for applications made by third parties.Applications include games, plug-in features for user profiles, and other programs.Most applications fail and only 250 of them get 1 million users per month.

7. TwitterOne of facebook’s rivals as a social networking site.Explosive growth in 2009.Simple and fun to use.Facebook playing catch-up

8. Facebookvs TwitterIn order to battle Twitter, Facebook purchased FriendFeed and created FacebookLite.FriendFeed was an aggregate of all the content of social media sites. Most of its user base are “uber social geeks”. Facebook likes its powerful search engine.FacebookLite, for people with slow internet connections, stripped down version of the site.

9. Facebook growthFacebook is still growing more than its competitors, and aims to beat Microsoft, Google, and other giants as a portal to share information.Customers are more educated about privacy and some believe that the benefits of the large audience and features outweigh the privacy issues.

10. Q1E-Commer is an important concept illustrated in the case and chapter. The case mentions that the FaceBook site includes a variety of tools to allow users to connect and interact with other users, whether I be through messaging, photo-sharing, user-created applications and others. Because of this, the FaceBook environment has become more self-sufficient and has been beneficial as a platform for FaceBook and developers.

11. Q2Web 2.0 is commonly associated with web applications that revolve around using interactive information sharing, networking, and collaboration among users. Facebook is a wonderful example of Web 2.0 based website. It offers many web-based applications, which provides profile users to get hands-on with the site. The rich social networking makes Facebook gathers lots of information that can be share with others. Also, Facebook is powered by powered by e-commerce services, which connect closer to users.

12. Q3One of the weaknesses of FaceBook and its privacy policy and features is Beacon, which offended the privacy of many users. This advertising service tracks down customers’ business behavior and updates it automatically on FaceBook without any user consent. This resulted in user information being shared, while not being completely agreed upon by the users themselves. Another weakness regarding privacy is the handling of News Feed features on the website which makes user actions public by posting actions on their wall, such as profile updates, adding new friends, and adding new applications.

13. Q4FaceBook does in fact have a viable business model as it has the ability to target markets based on very detailed demographic information, hobbies, regions and other specified criteria. Through this, people are able to find their friends on the sight and see the updates of their profiles and use the applications on their pages. As the volume of FaceBook increases, the company’s image grows more and more, become much more valuable. Because of the vast network achieved through FaceBook, users find themselves doing business on the site. FaceBook mainly makes revenue on the basis of advertising to its users.

14. Q5Finding the target market for advertising companies without violating the privacy of the website’s users is a very complex problem. If we managed the website we will make our best attempts to try to collect as much user information without making them feel as if we were violating their privacy; the users of our website make us what we are and they are mostly important. This can possibly add to the websites reputation and can result in being overall beneficial for the company. We would like to operate the website in a trustworthy way.