With #2, they don't sell the data because they don't need to, and because it would threaten their profits. They use the data themselves to categorize people an

With #2, they don't sell the data because they don't need to, and because it would threaten their profits. They use the data themselves to categorize people and sell advertisers access to the categories. As an advertiser, I don't get a list of people - Facebook keeps that hidden. What I get is the knowledge that my ad is shown to the people I want in the category I want, because Facebook does that part for me. Shadow profiles enable them to do this in a much broader way, and also allows them to build growth engines into their system so if you do decide to join facebook, you see hundreds of suggestions that make you more likely to get addicted.