Facebook has made strides in 2012. A billion users and a smart new Timeline UI punctuate a banner year for the world's most important social network.

But 2012 also marks aggressive moves to expand and monetize — some might say at the expense of user experience and community. At best, Team Facebook is making tough choices in a delicate balancing act. At worst, they are tone deaf to conscientious users.

While we're a far cry from mass exodus, there are only so many missteps to take before someone eats Facebook's lunch.

Here's what went wrong in 2012.

1. Personal Promoted Posts

In October, Facebook rolled out a curious feature called Personal Promoted Posts. Users now have the ability to make their content more visible in friends' news feeds for the low, low price of $7.

Brands have had similar capabilities for a while, but personal promos bring a dubious business model into focus. Essentially, Facebook hides content from your friends and then asks you to pony up the cash to make it more visible.

Facebook claims its news feed algorithm (known as "EdgeRank") brings relevance to a noisy network. But promoted posts expose an obvious play on artificial scarcity. Facebook is rigged.

This is a misstep for two reasons:

It's detrimental to user experience and community.

Regular users aren't going to pay to share photos with friends.

The move is ultimately bad for business.

2. Slaughtering the Sacred Cow: Instagram

When Facebook announced plans to purchase Instagram in April for a cool $1 billion (later devalued at $730 million, thanks to Facebook's poor stock performance), the world drew two conclusions:

Instagram was a mobile/photo land grab Facebook couldn't afford to ignore.

Instagram is doomed.

Instagram is beloved, not for its cute filters, but because it's an intimate and valuable community. Mobile-only and re-post free, its architecture engenders a culture of original content — quite a feat on a social web rife with unsourceable dreck.

Compromising Instagram's purity was inevitable, whether Facebook bought it or not. The photo network had no business model. It was time for advertising.

But in a reckless maneuver, Instagram's recent terms of service update flipped the bird to the creative community that made it great. Not only did it break down the data wall among Instagram, Facebook and third-party "Affiliates," but it laid the groundwork for an exploitative business model.

To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.

A fierce outcry from the web already has Instagram backpedaling, with co-founder Kevin Systrom vowing to strip the language above from its ToS. But confidence has clearly been shaken.

It's a reminder that in a Facebook world, we can't have nice things.

3. Instagram vs. Twitter and the Rising Garden Walls

In a move that has gone largely unexplained, Instagram disabled support for Twitter cards in early December. Instagram links no longer propagate as photos in Twitter streams, and users who've married the two in their social media lives are frustrated.

It's clear Facebook still views Twitter as an existential threat, and perhaps rightfully so. The two networks keep adopting each other's features (Twitter incorporating media, Facebook becoming a real-time news feed). But killing Instagram's Twitter integration is a classic "walled garden" move by Facebook, and a sign that if you still want to use Instagram, you'll have to play by Facebook's rules.

Who loses in this battle of APIs? Users, according to Mashable's deputy editor Chris Taylor. I have to agree.

4. Facebook Messaging Gets Weird

We've had email since the '70s. It's not that hard to implement.

Yet baffling quirks in Facebook's messaging system came to light in 2012.

The first was a "hidden inbox" that stored messages Facebook deemed unimportant. Users in late 2011 and early 2012 were surprised to find outdated communications from friends and family buried there. While this "Other" inbox was not a new feature, it became black mark on Facebook's user experience in 2012. Remember kids: Users, not algorithms, should determine what is and isn't important.

Another bizarre feature that bubbled up this summer was "Message Seen" notifications — essentially, a read receipt that indicates when users see your messages, chats and group posts. You can no longer hide from unwanted Facebook communications. Your friend will know as soon as you've read (and ignored) that request to attend her poetry slam next Thursday.

Oh, and you can't turn it off (not without some fancy browser extensions, anyway).

If that's not enough, Facebook just rolled out a dandy new feature that lets strangers send you a message for $1. Get ready for spam, unsolicited pitches and long-lost stalkers.

5. EdgeRank Dings Publishers

The promise of brand pages was perhaps best realized by media organizations who drove buckets of traffic and engagement from Facebook. The News Feed matured as a destination for actual news, and publishers enjoyed a social symbiosis.

Then, suddenly, referral traffic from Facebook tanked.

Facebook's EdgeRank algorithm was "optimized" to equate engagement with relevance. Items that get more likes and comments get news feed preference. That's great for photos of your sister's puppy. Not so great for political analysis of the fiscal cliff. Publishers — who invested big resources into Facebook strategy — felt the burn.

Many decried the changes, noting the "coincidence" that paid promoted posts had rolled out mere months before organic page engagement started falling. Facebook's response: It's all about optimization, relevance and reducing spam. As long as brands aren't spamming, they should keep on keepin' on. Yet many found their pages increasingly "irrelevant" to users who had opted in to their updates.

Crafty brands resorted to image shares (which are more visible, and favored algorithmically) over links, resulting in a social news culture akin to TV: If it bleeds, it leads.

Congrats, Facebook. Our last chance at intelligent news feed discourse was snuffed out like a dollar store tea candle.

6. The Death of Social Readers

"Frictionless sharing," they said. "Stream your browsing history," they said. The social reader trend kicked off in 2010 when The Washington Post first entered the frictionless fray. The Guardian followed suit in 2011. Social readers sent boatloads of traffic to participating publications, despite the warnings of privacy advocates.

Trouble was, a lot of that traffic was coming by accident. The apps essentially trick users into sharing things they may not have intended. In order to see links streamed by your friends, you need to install the app, as well — an annoying roadblock to content.

After about two years, users wised up and disconnected the apps in droves. In late 2012, seeing little return and heavy backlash, both The Guardian and The Washington Post ditched their social reader apps. Proof once again that users want to stay in control of the content they share on Facebook.

7. F-Commerce Is a Flop

Big plans were laid for Facebook Commerce in 2011. After all, wouldn't everyone want to shop where they hang out online?

Not so much. Major retailers such as Gap, J.C. Penny, Nordstrom and GameStop shuttered their Facebook stores within months. Why?

Perhaps they were ahead of their time, as my colleague Lauren Indvik argues. I posit that Facebook shopping is superfluous. I can already sit at my desk and purchase just about anything with a few clicks and a credit card. Why should I go through another middle man (Facebook)?

And the notion of "social shopping" may never really come around. Of all the products you buy, how many do you really want to share or recommend to friends and family? Most are mundane, some are embarrassing, or imply things about income or social status. It's a nasty web of privacy and etiquette that most consumers have no interest in tangling with.

Who Will Pay for Facebook in 2013?

When was the last time Facebook introduced a new feature that made you exclaim, "Whoa, this is awesome!"? Maybe it was Timeline. Maybe it was something from long ago.

Paid promoted posts, paid messages, even a re-launched gift marketplace? Feels like Facebook's post-IPO revenue burden has shifted from advertisers to users. That's not inherently bad, but none of the big, modern social nets work this way. Facebook had better know what it's doing.

Essentially, Facebook is heading toward a "freemium" model. You can sign up and use it for free, but if you want the bonus features, you're going to have to pay.

Why the scramble for new revenue streams? Perhaps Facebook advertising, in its current form, doesn't pay the bills. Indeed, there are recent reports the network may be launching in-stream video ads — maybe even ones that auto-play. Shudder.

Whatever the complications, it's clear that post-IPO Facebook is a radically different place. If the network has any hope of acquiring its next billion users, it will need to spend some resources on wowing them, not just shareholders.

Images courtesy of aflutter, iStockphoto, andrearoad, Flickr, Ryan.Berry