Yesterday Facebook announced a new and ambitious platform called Facebook Ads to leverage the social network to become an ad network in and of itself with tentacles that reach out beyond their own site.

Erick Schonfeld from Techcrunch describes the new program succinctly:

Facebook Ads is comprised of three parts: Ads targeted at Facebook members using their profile data such as age, gender, relationship
status, work history, and stated interests (Social Ads); ad widgets that advertisers can put on their own sites that allow Facebook members
to become product endorsers, and spread that endorsement to all of their friends on Facebook through their personal feeds (Beacon); and
aggregated profile information that is exposed to Facebook advertisers that tells them what kind of people are getting their ads and who is
clicking on them (Insight).

Of note, the inventory available to advertisers for this new ad platform is not going to be controlled by Microsoft. They will
be left with the basic, un-targeted inventory, while Facebook maintains control of the new Social Ad inventory (which is presumably going to
have a much higher eCPM).

Time will tell if this flies, but if Facebook users find that the more they give, in terms of profile information, the more
they'll be targeted and pandered to by advertisers, then they'll be less likely to put their personal information online. Having lost
their trust in the site, they might just decide to move on to a less exploitative network, or give up on Social Network sites
altogether (hey, it could happen!). Regardless, once the users leave, so will the revenue. Then that $1B offer from Yahoo a year ago will
look like it was a pretty fair deal after all. The biggest loser in that scenario will be Microsoft, who have invested hundreds of
millions of dollars in a site that could become a ghost-town overnight.