The key paragraph in this Wired article is at the end:
users’ off-Facebook activities are basically part of the Facebook ecosystem thanks to “Likes” published all over the Web. If you click the Facebook Like button on any given site, that data is transmitted to your own Facebook profile and can be promoted by marketers in ads to your friends.
So it is that there are (digital) spies following us everywhere, recording our conversations, and sending reports to marketers. Facebook may be the biggest such operation but Google and others have similar ambitions: that's why they encourage us to use the same logon credentials.
That's the scary part. Here's why it's happening.
Most Web businesses charge nothing for their services, and their users also appear to value the services at zero -- with very few exceptions (typically businesses that cater to niche, upper-income audiences), experiments to charge more than zero have failed. This could be partly due to low barriers to entry: someone else can always put up a similar website and, at least initially, decide to forego making any revenues.
The problem is quite intractable. If users can get the service for free today, they have no skin in the game. They will move on to a competitor if you start charging. Also, they are trained to expect the service for free.
But businesses need to turn a profit. So they have turned to advertisers. Advertisers want to see return on their investment, and since the Web is data-rich, they want to see direct actions. Gone are the days of TV and radio advertising where they are willing to pay for proverbial eyeballs, estimated using surveys. Nowadays, they can, and want to, see actual people clicking on their ads, and better yet, actual people spending money after clicking their ads. They are willing to pay a lot more money for advertising space if they have confirmation that it is effective.
Facebook is desperate. It is different from Google. A Google user is searching for something, and if an ad is relevant, the user will click on it. The Facebook user is typically chatting with friends; not surprisingly, advertisers have not been impressed with the effectiveness of Facebook ads. That's why they are trying to insert these ads in to our conversations. We'd feel like a waiter standing next to our table at a restaurant, listening to our private conversation, and then inserting himself into the conversation to sell us the special whatever of the day.
It turns out most of Facebook conversations are not information-rich. Most of the chitchat is just that. So, Facebook wants to know our habits and likings. They want to know what we are doing when not chatting online. So they set up this network of feelers around the Web, the Like buttons. On the one hand, these sell convenience to the users and their communities; on the other hand, they compile profiles of users, secretly, that can be sold to marketers.
Will this strategy succeed? It's hard to tell. To what extent will Facebook users tolerate this form of digial sleuthing? Facebook's main product is convenience, and community; inserting ads compromise the product. How much private space are Facebook users willing to give up to be a part of this community (without paying an entry fee)? Should Facebook be required to disclose how it is collecting and using our data? Will another competitor emerge to take the users away?