Facebook prepares for life in public

facebook logo over ipo Symbol CBS/AP

CBS/AP

One billion users inhabiting the Facebook cyberspace and $10 billion to invest in making the king of social networks even more captivating, or inescapable, depending on your perspective.

That's the how Facebook's future is shaping up as the IPO, which could value the eight-year-old company at $100 billion, is on the horizon.

With the forthcoming influx of cash, public disclosures and high net worth individuals, Facebook will undergo even more scrutiny, with different factions among the Facebook citizenry expressing their views on the growing power of the company.

For the Facebook haters, Mark Zuckerberg and company are building a huge moat to keep users inside the Facebook social graph and exploiting their data for personal profit. 

For the Facebook fans, the company is creating a digital Shangri-La for everyone on the planet.

And then there are the hundreds of millions of Facebook users, 80 percent of which are outside the U.S., who just use the service and don't fret much about privacy, exploitation, monopolization or other issues that surface when a dominant, innovative company colonizes a huge part of the web.

Zuckerberg explained Facebook's longer-term strategy during a developer event in September 2011, "The next five years are going to be defined by the apps and depth of engagement."

Facebook already leads the digital universe in engagement and the number of apps and web sites that integrate with Facebook is beyond 7 million.

According to Nielsen Net Ratings, Facebook users spent an average of nearly seven hours on the social network in December 2011, compared to Google at one-and-a-half hours and Yahoo at just over two hours. 

Facebook is also making inroads in music, news and other key activity areas for Internet users. For example, Facebook's users can see what music others listen to, view their listening history and join them in listening to a song. In the last 16 weeks, Facebook users have shared 5 billion songs across 50 countries, according to Dan Rose, Facebook's vice president of partnerships.

Rovio's immensely popular game Angry Birds, made famous on the iPhone, will be available on Facebook in a few weeks.

Three killer reasons Facebook's IPO could be worth $100 billion

Complete coverage: Facebook IPO

In addition to monopolizing peoples' time on the Internet, Facebook is leading in the lucrative the online display-advertising market. According to comScore, Facebook's share of the display ad market in the U.S. was 27.9 percent in 2011, advancing nearly 7 percentage points over 2010. The closest competitor, Yahoo, was at 11 percent in 2011. 

With increasing data about users and brand and product affiliation, Facebook has the raw materials to increase its value proposition to advertisers. While the percentage of people who "like" a brand don't engage with it in large numbers, and privacy concerns surround the use of data and the social graph for more precision ad targeting, the potential revenue upside is substantial.  

Facebook could also be looking at entering Google's wheelhouse -- search and video -- just as Google is trying to break Facebook's stronghold in social networking with its Google +. 

Google search had a 66 percent share of the U.S. market for search in December 2011, according to comScore, and its making a significant effort to socialize its search results.  The company recently unveiled a new search feature called "Search Plus Your World," that adds results from a user's friends on Google+ in addition to the usual web results.

Facebook CEO Mark Zuckerberg
Getty Images

Facebook isn't going to invest in out-gunning Google in search. It will leave that daunting task to its partner Microsoft Bing for now, but over time Facebook's social search sprinkled with the standard web results could become robust enough keep users away from Google for many kinds of searches. 

On the video front, YouTube dominates the landscape. But just as Facebook took the crown in photo sharing from sites like Yahoo's Flickr, a billion users could make a video village. 

Heading into the next phase of its life, colonizing its next billion people on the planet, one can assume Facebook has some good ideas about out how to spend its pot of IPO money and apply its growing market power. The company, and Zuckerberg, will have an even bigger target on its back. The question going forward is whether Facebook can avoid the pitfalls of power and greed, and adhere to its 10 core principles, a social network "constitution," for the online civilization it is building. 

  • Dan Farber On Twitter»

    Dan has more than 20 years of journalism experience. He has served as editor in chief of CBSNews.com, CNET News, ZDNet, PC Week, and MacWeek.

Comments