Monday, May 24, 2010

Facebook juggernauts towards 500 million users has observed that, based on linear projections of current sign-up rates, Facebook will pass the 500 million user milestone by the end of June. Using population data published by the CIA, we will therefore soon have the situation where only China and India as countries will have more people than Facebook (1.33 and 1.56 billion respectively). Projecting further, Facebook will have twice as many people as the US by year end (around 600 million), and approximately a billion dollars in revenue as well.

It remains to be seen whether the current privacy backlash against Facebook introduces unpleasant non-linearities into these projections. A recent informal poll taken by Graham Cluley of Sophos, found that almost two thirds of the 1588 respondents are considering leaving Facebook. If we round up the respondents to an even 1600, and noting that Facebook has more than 320 million users currently, the survey represents a sample of less than 0.0005% of all users (that’s just 5% of 1% of 1% of the total). Even so, PC World has reported the survey under the headline Study: 60 Percent of Facebook Users Mulling to Quit which, I hope you will agree, is a bit grandiose. This is an example of how the non-linearities of reputational risk start accruing against a company with widespread and sustained bad press - and more will follow.

Privacy may yet be the Black Swan of Facebook.

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