Facebook's genius has been to make it "cool" to "tell all your friends" what movies and products and politics you like, which is exactly the data advertisers are dying to get their hands on.
A few months ago, I placed an ad on Facebook, mainly as an experiment to satisfy my curiosity about how their advertising system works. It was a few days before the British royal wedding, and I had done up a silly little photoshopped image of the bride and groom with their faces swapped, so I decided to see how much traffic I could drive to that page. I told Facebook I was willing to spend up to $10 on the ad over three days (I ended up pulling the plug, curiosity quenched, after spending only $8). Then I got to select who the ad was presented to...and that's when things got creepy. Because of all the causes and opinion crap that people "like" on Facebook, I was able to choose to only show my ad to people who liked any of the following pages/causes/ideas:
I don't remember them exactly, but that's about what they were like. I chose both pro and anti-royal people since both might have liked the image. In the end, the page got 78 likes, an order of magnitude more than I've ever received for anything else, aside from this entire blog.
What was really fascinating to me was how many options and combinations were available to Facebook advertisers. If you wanted to target an ad at the subset of society of "seventh-day adventists that love Mitt Romney, Sesame Street, Astrology, Keanu Reeves, and Scuba Diving", Facebook can actually produce those people for you to advertise to. That's immense marketing power.
But is it a breach of privacy? Not really. Facebook only knows what you tell them, and they only want that information to facilitate your consumerism.