Facebook Acquisition Wars: Microsoft v Google
Facebook Acquisition Wars: Microsoft v GoogleSep 26 2007 - Social media - Farhad Divecha
Even though Facebook is not the most popular social networking website, it is currently the most sought after property. The Wall Street Journal yesterday reported that Microsoft has valued Facebook at approximately $10 Billion, and has expressed an interest in buying a minority stake in the company.
Google has expressed an interest in Facebook in the past, but was turned down by Facebook’s owners, who want to grow the company internally and eventually take it public. Their strategy is definitely working so far, as one year down the line the value of the company is being estimated at 5 times what its owners wanted for it in 2006.
Microsoft has reportedly approached Facebook with plans to invest in the company by purchasing a 5 per cent share for a price in the range of $300 million to $500 million. Facebook is considering raising as much as $500 million total in cash that could be used for acquisitions, investing in computer infrastructure and adding to its roughly 300-person head count, with their top priority being the development of an ad platform of its own that would let online marketers target users with ads based on personal user information, using an automated Web-based system, according to people familiar with the matter.
Facebook.com Visitation Trends, Total U.S. Home/Work/University Locations.
Source: comScore Media Metrix
Continued interest in Facebook rather than other social networking sites could be due to its meteoric rise over the past few months to become one of the top 5 social networking sites, the 200,000 new users registering to use the service each day or the attractive user demographic of young and middle-aged professionals who use the site, which can be seen in the chart alongside.
The chart shows Facebook.com’s demographic profile in terms of thousands of unique visitors in May 2007 from U.S. home, work and university locations. (Source: comScore Media Metrix).
Facebook was the 16th most popular site in the world in August 2007, according to reports from comScore. The 69 million unique users to the site mark an increase of over 300 per cent from August 2006. The site has yet to display an ability to translate user numbers into concrete revenues that can justify these lofty valuations. The current agreement that allows Microsoft to serve display ads on Facebook is expected to bring in only $75 million this year. That does not seem to deter the software giant, though, especially since Facebook will be just another conquest in their battle to gain supremacy over Google.
Another article on the Wall Street Journal also talked about Microsoft retaining the services of a PR firm to implement a subtle campaign to convince Internet companies, regulators and advertisers to oppose Google’s planned acquisition of DoubleClick.