This has been bugging me for a while, but I don’t know that much about it. Perhaps some of my readers could edify me in the comments section.
If I am not mistaken, Facebook looks at the information we post on their site and sells it to advertisers. I do not know whether they look at the contents of the messages we send to each other, but my guess would be that anything that uses the site is fair game.
This raises a question, namely: why on earth are we all using Facebook so much? Let’s go back to email, which I think (but am not sure) is not monitored by anyone. I think I can email my brother and write, “Wow, those Kleenex (TM) brand facial tissues sure did help me when I had a cold” without then having my love of Kleenex sent off to Proctor and Gamble (or whoever makes Kleenex) along with my email address.
I find Facebook extremely limited in its usefulness. I have around 800 Facebook friends, most of whom I do not know. When I put a picture of myself holding my French horn up as a profile picture, I picked up about 100 horn playing “friends” from all over the world, which is kind of cool in theory, but really all it means is that there are a bunch of horn players all over the world. I knew that already.
I have never responded to a Facebook event invitation. I have never put my birthday on anyone’s birthday calendar. I don’t do any of the special things that Facebook allows me to do, and I’m not really aware of what those special things might be.
In all fairness, there are a few excellent videos on FB of my group the Meridian Arts Ensemble performing live, but really, those could be on Youtube just as easily.
Facebook is now becoming a publicly held corporation, valued at nine gagillion dollars. Somebody thinks Facebook is worth a ton of money, and that somebody is advertisers. So why are we voluntarily giving them a tidy list of our likes and dislikes?
Daniel Grabois 
The content of your email messages *is* monitored, actually. For example, if you use Gmail, the Google computers scan your messages in order to target the advertisements they show you. They do not, however, share that information, nor do any humans ever see it (or at least that’s what they promise). So, to use your scenario, if you write (or read) an email with the word “Kleenex” in it, Google’s computers might see that and place a tissue ad (or an ad for cold medication, or anything along those lines) alongside that email. It would not, however, send your personal information to Proctor and Gamble.
Even if you use an independent email address (like your UW-Madison email) you are not immune to this. The UW surely isn’t scanning your emails, but if you send an email to a friend with a Gmail address it will be scanned when they read it.
This issue isn’t isolated to just Facebook or Gmail. Many MANY websites collect information about you. If you go to amazon.com and browse for books about photography you can bet that next time you visit the site you will see some ads for cameras or other photography books. If you search for flights to Cancun on Expedia you can bet that you will soon be seeing ads for beach resorts. Sharing private information is simply one of the prices of using the internet. There’s not much you can do to avoid it except, well, not use the internet.
Wow. Or rather, ouch. This makes me think that face-to-face, rather than Facebook, is the way to go.
You might enjoy reading this editorial that appeared in Newsweek a few months ago. It’s a fake letter from Mark Zuckerburg–what he might have written if he were being honest about Facebook’s privacy policies.
http://www.thedailybeast.com/articles/2011/11/30/the-truth-about-facebook-privacy-if-zuckerberg-got-real.html
After reading the editorial from Daily Beast, I am more convinced than ever to avoid Facebook. I recommend to my legion of readers to follow Daren’s link (one comment up).
I am, and always have been, a Facebook refusnik. I’ve never used it for myself and never followed someone else’s link to it.
Likewise, I would never have a gmail account, specifically because, as Darren says, they scan the content for advertising opportunities. What I didn’t know (and this is really scary) is that my incoming email to someone else’s gmail account is also scanned for content. Yikes!
I guess there’s really no privacy on the internet. The best we can do is work to keep invasion of our privacy to the barest minimum.
We should reconsider the Pony Express as an excellent option for the transmission of information.
I will share another article here because it is tangentially related to your concerns about privacy on Facebook. This article just appeared in the NY Times and talks about how retailers (it uses Target as a case study) collect data about us and use it mercilessly to influence our purchasing habits. Turns out we don’t need to give away any personal information on the internet–companies are finding out plenty about us just by watching how we spend our money.
It’s a lengthy article that also goes into detail about how our habits are formed, why they persist, and how we can change them. That information alone can be used beneficially in a great number of situations, not the least of which would be horn playing (and teaching!).