2) Indeed the point you make about non-techie friends is relevant but you miss the point -- most people don't care about these issues if the result is an amazingly useful tool. So what if ads are correlated with usage: god-forbid you see something interesting that you may want to buy or is relevant to your tastes. And honestly it's no more true that FB 'gives' your data away any more than Google 'gives' away your Gmail/Gdrive/Picassa/etc. data.
Without getting into an argument of which is worse, I think ultimately Facebook is more dangerous. Facebook has tremendous network effects and lock-down effects. I can switch from Google to DDG easily, but as long as my family in Bangladesh uses Facebook to post pictures of my nieces and nephews, my ability to switch away from Facebook is limited.
And I don't personally care--I'm not a private person and anything you want to know about me is probably on the internet. But I'm making an informed decision (within the constraints of the fact that Google and Facebook don't disclose exactly how they use your information, but I assume the worst). In my experience, most people who use Google and Facebook aren't.
Don't get me wrong. I think this stuff is useful. But there needs to be more transparency and more restraint than there is. A ban on collecting data on minors would be a start.
People seem to forget that it was the original targeted advertising. You subliminally got targeted by demographic specific ads based on the type of shows you were interested in. It just so happens that the way Google and Facebook do it is way more high tech.
The data goes into their platform, they dont' sell it. I think maintaining a healthy paranoia is good and we should pressure the companies to be better with our data. However, as long as they maintain security as a strong value, I think it'll be ok. At least I myself personally don't mind them holding my data as long as it is secure and private to me.
Indeed, my non-technical friends have only the vaguest idea that their usage has a correlation with the ads (Facebook isn't exactly full-disclosure about how their targeted ad model works). This is especially true with kids. You think my 13 year old nephew understands the privacy implications of using Facebook?
There is also the worry of what happens when Facebook stops being "the good guys" (which is a possibility for any corporation). What happens when the constant push to meet analyst expectations causes them to monetize user data in more and more insidious ways? I don't think anyone thought at first that the credit card companies were "evil", but the whole credit card/credit score mafia is doing legitimately devestating things to many peoples' lives now. Some people can't get jobs because of their credit scores. What happens when Facebook starts selling user data to employers doing background checks? Do we just assume that Facebook is full of "people like us" so they would never do that?