If 2007 was a breakout year for Facebook, then 2008 will be a testing one. After drawing praise and publicity for opening its doors to third-party software developers in May, the company and its
23-year-old founder Michael Zuckerberg ended 2007 on a low, as the media questioned the impact a new advertising system would have on the privacy of its 60 million-plus users.
Forced to relent after Beacon, one of the new advertising technologies, prompted a user privacy backlash, Zuckerberg issued a public apology and gave users a way to opt out of the service.
However, the failure of Beacon underscores the mounting pressure being placed on Facebook's shoulders. This is a company with an outlandish $15 billion valuation that has yet to figure out how to
monetize its audience.
"Facebook has these three constituent groups, and it's a really difficult balancing act, especially when you are trying to be innovative," says
Forrester Research analyst Jeremiah Owyang. That is, its users, software developers and advertisers. While users complain about privacy, software complain about the "never-ending" tweaks to Facebook's
platform. Advertisers are frustrated that the social network has yet to deliver on the promise of all that rich data the site collects from its users.
Read the whole story at Financial Times »