So that's how Facebook's gonna make money

As it turns out, Mark Zuckerberg had a plan after all.

I thought the founder of Facebook was nuts to turn down a reported US$1 billion buyout offer from Yahoo in 2006.

It had come at a time when the industry still had doubts over whether Web 2.0 and social networks, like Twitter and Facebook, were viable business models. Multibillion-dollar buyouts seemed to be the best deals these companies could yield.

Three years ago, I was also skeptical about Facebook's revenue model and business sustainability, especially since the site's click-through count for ads was underperforming and half its revenues then had come from its advertising deal with Microsoft. The company has since ended the agreement.

But Zuckerberg knew well enough that he was sitting on a goldmine, as Facebook's user base climbed and its members willingly volunteered an increasing amount of personal data to the site.

To date, the company has 400 million active users, half of whom log on to the site in any given day. More than 5 billion pieces of content including URL links, blogs and notes are shared every week, and the average user spends 55 minutes a day on the site.

And get this: over 3 billion photos are uploaded on Facebook each month...3 billion. That's 3 billion potentially incriminating pictures of someone dancing half-drunk on the bar table, and 3 billion potential Polaroid moments of someone mooning a passing car.

In fact, Facebook users have become so comfortable on the site that over 35 million of them update their status every day, and the average user contributes 25 comments on Facebook content each month.

And why shouldn't they? After all, the company had pledged to safeguard their privacy and allow users the control who can see what of personal data they provide to the site.

Ohhhh, waaait, that was what Facebook had promised.

I guard my privacy closely and got on Facebook only because my work required it. So when Friend requests came from my personal friends, I was hesitant about adding them.

But I took comfort that Facebook allowed me to shield my Friends list from public view and it was primarily because of this privacy control that I accepted several of the Friend requests that came through.

Needless to say, I was appalled when Facebook then decided Friends list should be made public, along with other personal data such as profile photo and gender. So I was no longer allowed to keep my Friends list hidden.

I felt like I had been taken for a ride.

Protecting my online privacy is a personal responsibility, I get that. So I make sure I'm fully aware of the terms and conditions stated in a company's site and take the necessary steps to protect my own privacy.

But, I make these decisions based on what a company states in its privacy policy and terms of service at that moment, and not on what it may decide to amend and adopt tomorrow or the week after.

So I take issue with how Facebook frequently changes its privacy practices and without offering users any way to reverse the decisions they made based on the site's previous policies.

As Sophos' senior tech consultant Graham Cluley noted in his blog, the social networking site was eroding users' privacy. "Too many Web sites are chipping away at their members' privacy and security, potentially exposing their personal data to third parties that were never in the equation when they first signed up for the service."

His comments had come after Facebook further aggravated users with its decision last month to allow pre-approved third-party sites access to user data, including names, profile pictures and friend connections, without explicit permission from the user.

It's great to see companies constantly changing themselves to stay innovative and commercially competitive. But, it shouldn't come at the expense of luring users into providing personal data under privacy practices that may no longer be observed days later, and then manipulate that data to establish business deals with third parties.

Until Facebook sees the folly of its ways, businesses have been advised to take care before entering into a partnership with the social networking site. It's a pity, especially now when it seems the company is finally ready to ramp up its investment and prove its business viability.

Zuckerberg reportedly said he rebuffed Yahoo's offer because he wanted Facebook to retain its independence and serve the interest of its users...serve the interest of its users...serve the interest of its users.