I think it's fair to assume that any site, anywhere, might wind up giving information that you have input into the site, to advertisers. You don't even have to input information, but just visit different pages on different sites that use the same ad network, and they already know what kinds of pages you visit.
Then, sometimes you get better ads shown, and sometimes they're hilariously misinterpreted. Honestly, who cares? And if you've got something horribly secret, then it's not the kind of thing you should be putting on Facebook anyways, where all your friends can see it.
This isn't McCarthyism, where you're being fired from your job because you visited the Facebook page for communism. All we're talking about is what ads you get shown, and even if someone is peeping over your shoulder, it's not like they know if an ad was targeted specifically to you anyways, or why. Junk mail has been doing this stuff for decades, sending you offers based on your credit cards, magazine subscriptions, catalog subscriptions, etc.
Seriously, can someone please explain to me any conceivable way in which this could negatively impact me? I'm genuinely curious if I'm missing something here.
In the case of Facebook, it's annoying because people have the expectation that they're giving information to their friends, and Facebook seems to work hard to make sure it feels that way. Thus, people who are unaware of the privacy implications might share something with their friends, something those friends already know, without realizing how much it reveals about them to Facebook, advertisers, future employers, etc.
And as for insurance companies rejecting you or charging you more -- this just seems like FUD. Has this ever happened before? And if it did, it seems like something for Congress to address, not a reason to stop using or hate Facebook.
And that's one of the major pain points of 'enforcing' privacy online for users. Together with all the 'global' sets of laws that are needed and need to be enforceable throughout the internet (the EU Data Protection being one of the steps in the right direction), it's painful to see that the legal system can't keep up (once again) with 'the free Internet'.
 It's another side of the spectrum of enforcing laws and norms on the Internet, users paying with their 'personal information' for 'free' services, besides all the anti-piracy efforts of the mpaa and such.
Or in other words, I use Facebook to keep track of / stay in touch with friends (efficiently). I dislike Facebook's policies and apps as much as the next person here, but unfortunately, Facebook is the place where the majority of people are compared to other networks.
That being said (and with no research to back me up), people seem to get the same high received from actually being social as they do from being social online. The medium/means doesn't matter for them.
The standard answer given for what percentage of communication is non-verbal is 93%. This means the Internet generation is, in effect, losing the ability to read such cues and effectively interact with others in the real world.
My FB is bare-bones and I seldom use it. There are purposefully only 15 people on my friend's list (because I use it for my actual friends). Unfortunately, I find little use for the site but just like I gave up household 15 items for a single computer, I'm in a somewhat "continuously temporary state of acceptance" when it comes to using the medium my friends use for email and invites to events.
What it comes down to is we consume things in 'bits and bytes' nowadays. Be it a status update, a tweet or a blog post. FB plays to this very well. There's the idea that by taking small bites of something, you eventually consume it whole. I disagree but many people would disagree with my disagreement these days.
I'll end with this thought. I've been fortunate to see trends and movements between 6 months and several years before they happen (more like a sense than a certainty, yet they always happen). Some years back, I realized that with everyone spending more and more time online, there would be a movement against this wherein people would look to use the Internet as a means to connect in the real world (think: Meetup.com). I think it's still coming (to fruition).
It's possible to organize things through email etc but if your group of friends check their facebook (to play farmville or whatever) more often than they check their email then that becomes to most reliable way to communicate with them.
Especially for creating say a "group" for some hobby activity or whatever. You could setup a forum etc which is what people used to do but now it's easier to just add a group to facebook on the assumption that 90% of your members will have an account and the rest can be peer pressured into signing up.
I post status updates and comments because it strengthens my ties with those friends to a point where I can resume them again when we might meet up again. My status texts may seem irreverent to others, but they're a reflection of what makes me me, and often times, that's why they're my real life friends.
I don't install a ton of apps there, but I'm not too concerned with any of my likes or data being 'abused'. I honestly couldn't envision a scenario where I'd care if a corporation thought they could abuse that info.
I have all (well, not all, but you get the gist.) info in single place. That's mostly it.
What does Facebook do that email can't do?
Automatically up-to-date address book.
RSS subscriptions to blogs
Blogs? What is this, 1990? Personal stuff is for pinmytweetbooksquaring, man. Blogs are for business spam and geeks, or something.
And what's RSS, anyway?
Also, ironically, privacy.
Any messaging/mailbox system is non-intrusive compared to a blaring ring-tone.
Also, not all of my friends are in the same time zone right now.
Talking to people face to face
Did I mention that not all of my friends are in the same time zone right now?
Even for those who are, and who I manage to see reasonably frequently in real life, we may still live far enough apart to make casual face-to-face discussions impractical.
Personally, I much prefer to catch up with family and old friends in person, even if it's less often. Reading the trivia of 100+ people's lives in 140 characters or fewer isn't my idea of friendship.
I recognise that this makes it harder for me to keep up with breaking news. Then again, as long as enough of my immediate family and friends do use Facebook and I see them frequently anyway, I usually hear about big news pretty quickly. And if all those people stopped using Facebook, probably my less local friends and family wouldn't rely on it so much to share their news. So I don't see the absence of Facebook as some huge void in my social life or anything.
Thus, the allure of convenience can make one accepting of the arguably inferior versions, because it requires less effort to use. See: camera-phones.
Of course, the simpler solution is just to ask friends who develop FB apps what they can access.
You can use facebook as a mostly passive medium.
I have apps disabled on my profile and have had them so for about 2 years. So if my friend uses an app as described above, I would image my data is still shared through Facebook, correct? Having apps disabled doesn't help me here?
I recommend checking to make sure you haven’t turned apps back on by mistake. If your apps are turned on but if you want to make sure, here is how to disable sharing your personal data with the apps your friends use:
Over the past 2 years I have had apps turned off. A few days ago I had signed up for Instagram. On my Android phone, I clicked "share with Facebook" but did not complete the sign-up as I did not want to accidentally enable apps. Yesterday I signed in to FB and saw app requests. FB had turned the app platform back on without any sort of "are you sure you want to change this setting" prompt. I have turned apps back off.
Always and everytyime.
In fact to make it a bit stronger even when you are paying for an App/Service/Whatever expect your personal information to be a part of the deal.