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In the weeks since the IPO, Facebook's stock has notoriously slid far below its offering price—and as of this writing is under $27 a share—but the daily stock prices are not the point at the moment. Even as Zuckerberg's personal fortune fluctuates in multibillion-dollar swings, his project is bigger.
Projected to have 1 billion users by year's end, the sheer size of the Facebook community makes it hard to grapple with. There are few commodities, aside from air and water, used by as many people. Only Coca-Cola and Microsoft, and maybe McDonald's, can claim comparable numbers. Fully half of all internet users are on Facebook, and that's a lot of eyes on ads.
But display advertising has proven to be a limited source of cash, and Facebook is focusing revenue streams from other sources. As the company itself noted in its SEC filing, "In 2009, 2010 and 2011 and the first quarter of 2011 and 2012, advertising accounted for 98 percent, 95 percent, 85 percent and 82 percent, respectively, of our revenue." (The company also gets a growing proportion of its revenue from fees paid by third-party apps and plug-ins, including 12 percent of overall revenue from Zynga alone, the company behind the popular game Farmville.)
The solution to the diminishing ad business, it seems, is tied to making Facebook into what Zuckerberg has called an "identity layer" for the entire web. That is to say that in his ideal version of the site (and world), everything you do on the internet will be through Facebook, including online transactions.
This is ambitious, but given the size of its user base, and how thoroughly it is already ingrained in people's internet habits, it's imminently achievable. Even a modest version of this in action would be a revenue juggernaut. If the company were to, say, realize a revenue rate of 1 cent a day per user, by taking a percentage of transactions from vendors, that would be roughly $10 million a day, or $3.5 billion a year.
This is troublesome when the head of the company has, let's say, "innovative" ideas about privacy. In 2010, Silicon Alley Insider obtained instant message conversations from when Zuckerberg was still at Harvard, in which he refers to users who have voluntarily given over their personal information as "dumb fucks." And indeed, the company was recently hit with a $15 billion class action lawsuit from a group of users claiming the company violated the U.S. Wiretap Act by tracking their internet use after they had logged out of Facebook.
The fact is, the more information Facebook gathers about you, and the more ways it has to monetize that information, the more the company is worth. Zuckerberg wrote in his letter to investors, "Facebook was not originally created to be a company. It was built to accomplish a social mission—to make the world more open and connected."
Even taking this at face value, it doesn't really matter anymore. Facebook is a company, and a publicly traded one. Even though Zuckerberg has a controlling interest in Facebook, it now has to be accountable to stockholders. The tension between user privacy and monetizing data in service of stock price is a real one—and seems unlikely to fall on the side of users.
I see congressional hearings in our future.
And what did Mark Zuckerberg, whose personal fortune is now bigger than the GDP of Jamaica, offer to the legions of users, whose time and information have imbued Facebook with its vast value? "In the past eight years," he said magnanimously, "all of you out there have built the largest community in the history of the world. You've done amazing things that we never would have dreamed of and I can't wait to see what you're all going to do going forward. So on this special day, on behalf of everyone at Facebook, I just want to say to all the people out there who use Facebook and our products, thank you."
He's right, it's all us. Which is a sweet sentiment, though not as sweet as the billions we earned him.
The crazy thing? Despite all this, I don't expect an exodus of conscientious objectors like me. A critical mass has been reached, and projections suggest the site will continue to grow in the foreseeable future. I am not fighting against Facebook; Facebook has already won. By next year, one-seventh of the world's population will have an account on the site.
At this point, Facebook is not a bubble that can burst—it has become a reality unto itself.
This article originally appeared in the New York Observer.