Put simply, I personally don't trust the American government at the federal level, and it's hard to find reasons why anyone should. People who restrain criticisms of the feds often like to pretend that all they need to do to prevent corruption is get into office any make the changes we want. Unfortunately that's extremely naive and huge waste of effort, especially when Congress has no term limits. I believe the only way to reign in federal abuse is by taking its power away.
My point here is that the government has a long track record for abuse at the highest degree, quite literally, and giving them my most personal and private data is terrifying. The problem is that we can't change governments on a whim, thus if we have a crappy one, we have to deal with it. In a free market however, if a corporation is caught with abuses, we can bury them in court and move to a competitor.
Not everyone is addicted, but rather Facebook has become arguably necessary because of its network effect.
Facebook has become the de facto standard of communication in some institutions. For example, in some universities, important notices on due dates or class cancellations is done solely through Facebook. One may be very heavily pressured to use it.
By the way, I don't have a Facebook account.
Presumely, usage by the business would be open-ended and very openly for the gain of the company first.
Meanwhile, a government agency were (at least in theory) bound by publicly available purposes and regulations.
Out of curiosity, why would you trust the private company more than a government agency?
I understand your point though and definitely agree with your on the sensitivity of the data.