Checking in on Facebook: Security Issues, Smartphone, IPO

Brittney Barrett  |

The federal government announced a broad settlement demanding Facebook to adhere to its user’s wishes concerning their privacy and regular audits for the next 20 years. Facebook, since its inception, has been the centerpiece of the argument regarding the internet and its role in diminishing privacy.  The commission, according to NYTimes coverage, asserted that Facebook made its users' information public without their awareness. For all the transparency that Facebook has added to the lives of its now 800 million global users, the company seems to have exposed little about itself and its methods.

The media and users alike remain skeptical of Facebook’s privacy settings, from cookies that never turn off to the information it sells to its advertisers. Mark Zuckerberg, Facebook’s founder and chief executive, conceded to the fact that they have made a “bunch of mistakes” in a blog post after the announcement, but the errors aren’t slowing him down.

Rumors continue to swirl regarding the introduction of a Facebook phone. Some analysts are questioning why Facebook would want to invade the smartphone market, where Apple (AAPL) and Google (GOOG) seem to have such a firm grasp over the market share, but the company has yet to comment on its motivations. Among social media devotees, the desire for a Facebook phone is minimal according to a recent article by Mashable’s Pete Cashmore in CNN. When questioned regarding how welcomed the Facebook telephone would be, privacy concerns were among the top reasons listed by consumers as reasons they would not wish to have a Facebook-run phone.

Subscribe to get our Daily Fix delivered to you inbox 5 days a week

“Facebook already has enough information about us, some people fear, and buying a Facebook phone would surely provide the social-networking giant with even more control over our personal data,” said Cashmore.

So with minimal demand, why would Facebook continue with its efforts to create a phone? Perhaps it’s because Google, its top competitor, with whom it competed for the number one most trafficked site on the Internet, made the transition. Facebook is late to the party here, but the smartphone market is arguably the one area of technology growing with greater gusto than social media. The opportunities that entail, from cell phones as credit cards to the sale of applications, would continue to add to Facebook’s massive influence. Having just been chided for its violations of privacy and its misuse of private information, it’s no surprise Facebook is staying mum regarding the introduction of its phone. Having access to all of users' contact information, their habits and the details of their relationships via information potentially mined from the phone, Facebook would essentially have a monopoly on personal information.

No other company, with the exception of Google, could compete in terms of developing a targeted audience for its ads should Facebook glean such power. Until now, Google has dominated in this field with its access to people’s past and present searches, but with the introduction of a cell phone, Facebook would be  competitive in terms of its access to information. Additionally, the whispers of the Facebook phone and the potential revenue it could draw in, whether from the use of Facebook currency, the purchase of applications or the premium it could demand for its advertising, could contribute to the strength of its upcoming IPO. Facebook is looking to raise $100 billion, according to Forbes for its initial public offering and with recent profits underperforming expectations it may be more difficult to reach that point without evidence of potential new growth.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Symbol Last Price Change % Change