Facebook hits advertising hurdle

Facebook: under fire

In a move that could cast doubts over the revenue potential of social networking sites, Facebook founder Mark Zuckerberg has made fundamental alterations to his new advertising system – Beacon – after widespread consumer complaints.

Beacon was designed to make Facebook's huge user base more profitable by telling a user's "friends" about that user's purchasing activities on third-party web sites.

But a raft of complaints led Facebook to change the policy from an opt-out to opt-in. Zuckerberg apologised to users.

"We simply did a bad job with this release, and I apologise for it," he wrote on his blog.

Though valued at $15bn (£7.39bn), Facebook has yet to find an effective way of generating revenue from its user base.

Google faced similar problem three years ago when consumers complained widely about its AdWords advertising system on its first release. The company had to tweak the system to make it less intrusive.