The rumored technology would work like this: Facebook would place a cookie on your computer (the site already requires users to have cookies enabled to log in), every time you visit a third-party site that runs ads utilizing the "Social Ads" product, they would be targeted based on your social networking profile data. So, theoretically, if you've professed your love of Pepsi on your Facebook profile, you might see Pepsi ads while reading the news at MSN.
Would users be comfortable with the idea of their profile data following them around outside of Facebook in the form of potentially very personally targeted advertising? Though, in reality, it is probably not that different from using your data to deliver ads on Facebook (the data is available to advertisers either way), it may just feel creepy to users to have the information about their lives that they had thought they were sharing privately with friends being used to target advertising directly to them across the web.
If this does fly, it could be a big win for Microsoft, whose $240 million investment in Facebook is thought by many to be more about acquiring a stronger advertising relationship with the site than acquiring a stake in the company. A combination of Facebook's immense, untapped user data set and Microsoft's ad sales team could mean significantly higher CPMs for sites using Microsoft's ad networks and higher revenue for Facebook and Microsoft.
What do you think? Is this a good idea for Facebook or will it just draw the ire of users? Would you continue you use a site that you knew was using your personal information to target ads to you on other web sites? Is Facebook's rumored proposal crossing the line in terms of privacy?