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However, following concerns over the privacy implications of the practice, a new EC Directive, to be introduced in January, will ban such targeted advertising unless users specifically allow it.
Even though most of the information it harvests is stored on computers in the USA, if Facebook fails to comply with the new legislation it could face legal action or a massive fine.
The move threatens to damage Facebook's plans to float on the Wall Street stock exchange next year, by undermining the way it makes money.
Using sophisticated software, the firm harvests information from people's activities on the social networking site – whatever their individual privacy settings – and make it available to advertisers.