I have been watching the uproar over Facebook Beacon over the last couple weeks with some amusement.
The system was intended to aggregate purchase histories from some online retailers, a poorly thought out attempt to deal with the lack of purchase intent that makes it difficult for Facebook to generate much revenue from advertising.
Om Malik calls (  ) Facebook Beacon a "privacy nightmare", a "fiasco", and a "major PR disaster". He goes on to write that, even after the latest changes, "I don't think it's easy to trust Facebook to do the right thing."
Dare Obasanjo says "Facebook Beacon is unfixable" because "affiliate sites are pretty much dumping their entire customer database into Facebook ... without their customers permission" and accuses Facebook of "violations of user privacy to make a quick buck."
Eric Eldon at VentureBeat writes that Facebook is dealing with "a revolt against the feature, because it sends messages to your friends about your purchase and other online behavior .... whether or not you are logged in to Facebook and whether or not you have approved any data sharing."
The NYT quotes one Facebook user as saying, "Just because I belong to Facebook, do I now have to be careful about everything else I do on the Internet?" and quotes another as saying, "I feel like my trust in Facebook has been violated."
Facebook faces a hard challenge here. Facebook users are not coming to Facebook thinking of buying things. Because of this lack of commercial intent, most advertisements are likely to be perceived as irrelevant and useless to Facebook users. That will lead to low value to advertisers and low revenues for Facebook.
So, Facebook will struggle desperately to get the revenues promised by their $15B valuation, doing things that almost certainly will annoy and anger their users.
However, Facebook's success largely is due to benefiting from a fad. People flock to whatever social networking site all their friends are using. It wasn't always Facebook. MySpace was once considered by some crowds to be the place to be.
I wonder if all the annoying things that Facebook starts to do with its advertising will be what makes Facebook become uncool. It may be what makes Facebook's fickle audience want to find some new place to hang, somewhere that doesn't suck, and makes Facebook become yesterday's news.