Will Microsoft Buy A Declining Facebook?

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Will Microsoft Buy A Declining Facebook?

Nielsen Online’s latest survey results have provided some rather unhappy news for Facebook in the U.S. According to the report, Facebook’s popularity fell by about 10% in April 2008, compared to the previous month. The actual number of unique visitors has fallen from 24.9 million in March to 22.4 million in April.

Since comparisons with similar social networks are inevitable, it should be noted that traffic on MySpace reduced slightly from 60.3 million to 58.7 million, while that on LinkedIn shot up from 7.8 million to 8.6 million during the same period. Coming back to Facebook, the average yearly growth of the network, which was 98% between 2006 and 2007 has fallen to 56% between 2007 and 2008.

Seasonal variations in traffic have occurred on Facebook in the past as well, but that does not seem to be the case here, as other networks such as LinkedIn, Buzznet and Imeem continue to grow. It seems more likely that Facebook users are simply getting tired of it as the novelty wears off and application clutter grows.

Plans are afoot to launch a new Facebook profile layout that will be devoid of all the application spam and clutter currently seen on most user profiles. It remains to be seen whether Facebook will be able to gain back its lost users with these modifications or whether the social network has already lost its appeal and these changes come too late.

News of this loss in popularity does not seem to have reached Microsoft. The blogosphere is abuzz with rumours that Microsoft may be looking to acquire Facebook completely for somewhere between $15-20 billion, after buying Yahoo!’s search business.

The only visible advantage, according to Janet Meiners at Marketing Pilgrim, seems to be that Facebook, which has a lot of walled-off content will allow Microsoft and Yahoo! Search (which will by then also be owned by Microsoft) to access these pages, while keeping Google at bay. It seems unlikely, however, that this move alone will give Microsoft an edge over Google.

If the rumors are indeed true, Microsoft seems to have developed a worrying new penchant for picking up Web properties that are declining – first Yahoo! and now Facebook – rather than snapping up new and upcoming businesses like they did in the past.