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It’s a tricky one. It is clear that Facebook has massive potential. It is clear that the Facebook story is truly remarkable. But can it really monetise itself in such a way as to justify its valuation? But you know what, while the media focuses on the social media site and the question of dotcom crash two, something else worries me. For me, there is an aspect to both Facebook and Google that I find truly alarming. These are perhaps the greatest tools ever invented for creating groupthink.
Before I look at groupthink, here are some observations on the impending Facebook IPO.

The valuation is, of course, off the charts. Facebook is planning to sell a 10 per cent stake for around US $10bn, suggesting a valuation of US $100bn. Now some might say for a company that was only formed a few years ago, and has only recently learnt how to make a profit, that is quite a high valuation. Others might put it more strongly.

Then again, it has 800 million users across the world. No doubt that number will pass the one billion mark. So that’s a valuation of around $100 per user. To justify that, the company must ultimately make, I guess, between $10 and $30 a user a year in advertising, or, one to three dollars a month. Squint a bit, help yourself to a large pinch of salt, and then maybe, just maybe, that is realistic.

The danger seems to be twofold. Firstly, that its users feel alienated as the company tries to make money from advertising. The ‘Guardian’ quoted Sir Martin Sorrell, who expressed some pretty serious doubts. “[Facebook is] certainly is one of the most powerful, if not the most powerful branding medium. It is, however, a word of mouth or PR medium. You interrupt social conversations with commercial messages at your peril,” he said. Now, when it comes to advertising Sir Martin knows what he is talking about. And his doubts cannot be dismissed. That is not to say that Facebook can’t pull it off. It may even exceed expectations. It may be the channel through which we ultimately conduct nearly all of our commercial activity on the Internet. Facebook may provide companies with the opportunity to target their ads with a degree of precision that is simply unprecedented. It is possible to envisage an upside scenario in which Facebook is worth a lot more than $100bn. It is just that the doubts expressed by Sir Martin may prove prescient. And if that is so, the company’s valuation is already way too high.

The second doubt relates to the fickleness of users. Internet products go in and out of fashion. Within two or three years, it may look as if Facebook is going to pull it off; that it is indeed generating substantial ad revenue per user, and then something may happen. It could be a new product, or a whiff of scandal, and all of a sudden, Facebook loses market share as fast it gained it.

But for me, that potential scandal is already staring us in the face.

But to illustrate my point, I will move away from Facebook, and look at Google.

Google has a new product called ‘search the world’. The new search tool taps into your Google Plus account (if you have one) and then tailors search results accordingly. Now look at this product from one point of view, and that seems truly remarkable. Google develops an understanding of what interests you, and amends search results accordingly. Why, in due course, you won’t need to type anything into Google, it will already know what information you are after.

But that scares me, and it scares me because the inevitable consequence of this is that we will be fed information which conforms with our existing views. There is a book out called ‘The Filter Bubble’ by Eli Pariser, which looks at precisely this idea. He gave as an example an experiment in which people Googled Egypt. They received different results depending on the information Google already had about them. In some cases top links were to Egypt as a tourist destination, in others it was as a place of social unrest. You may not like the BBC, but at least its editors try to be objective. When the editor of your news is a computer algorithm, the risk is that all the editorial you read will just reinforce your views, and take extreme ideas and make them more extreme.

I have a thing about Groupthink – in fact I have written a book about it myself (‘The Blindfolded Masochist’). I think it is dangerous. It can most certainly charge bubbles, underpin absurd stock market booms, not to mention lead to the odd massacre and war.

And that is why I think social media can be quite a dangerous tool.

We all know, companies are built up, become apparently invincible, and then something happens. News Corp is a recent example. I hope that we have a groupthink scandal, which dents the Google and Facebook halo sooner rather than later, and before some really serious damage is done.

These views and comments are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees