A lot has been made about the privacy settings on Facebook after they opened the site up to the web and linked profiles with external sites. What does this mean? and why would they make this decision? About four years ago, Facebook implemented the newsfeed and everyone was up in arms because of privacy concerns. Alas, it has become the most popular Facebook feature.
That being said, I think the recent decision to open up the web to Facebook just unlocked the magic of how Facebook can be a $100B plus company. There are two primary ways to make money on the web: advertising and e-commerce. Clearly, advertising is not an issue for Facebook as CPMs continue to rise for the company (or I assume they do as they get more demographic information and build out their ad sales team).
However, there is no dominant e-commerce platform on the web. Users go to different sites for consumer electronics, groceries, virtual goods, toys, shoes, etc. Each time you go to these sites, the biggest inhibitor is putting in your credit card information, logging in and looking for a product you actually want. Another inhibiting factor, which goes understated, is knowing when the product actually comes to market or even exists. A Facebook currency solves all these problems. People buy Facebook dollars, lets call them "Pokes," and Facebook creates the first universal currency for the entire web. Whenever a store advertises on Facebook or you visit the store's site, anyone can buy with facebook dollars ("Pokes," i think i just like saying that). People start recommending products they are buying (tickets, shoes, music) on their facebook profiles, even generating themselves an affiliate fee. Facebook takes a small piece of every transaction just like a credit card company.
Users win because they buy things that their friends recommend and discovery and purchasing becomes easier. Retailers win because significant barriers to purchase on the web are removed. Facebook wins because it becomes the biggest ecommerce platform on the web.
Fast forward 5 years from now. Using the logic above, could you see people using their mobile devices as debit/credit cards to purchase in person using their "Pokes?" Not out of the question, especially if you believe that every retailer will have a marketing campaign on Facebook and will be somehow registered on the site.
Hmmmm, makes me think that I should have bought Facebook secondary shares at that $15B valuation. I am definitely going to regret walking away from that opportunity.
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