Monday, September 24, 2007

Microsoft: A Case of Throwing Money at Your Problems

So apparently Microsoft seems to think Facebook is worth $10 billion. Yes, this after analysts gave the social networking platform a valuation of $4.5 billion a little over a month ago. According to the WSJ, Microsoft is in the early stages of talks with Facebook founder Mark Zuckerberg about possibly buying a 5% or less stake in the company worth around $300-$500 million.

I'm scratching my head on this one. Mark Zuckerberg, in the meanwhile, is laughing himself silly.

Microsoft hasn't proven too adept at taking advantage of the social web thus far--and this latest move has me wondering how exactly they would integrate Facebook's community into their own products and services. This is the same feeling I had when Microsoft purchased aQuantive back in May. Steve Ballmer really has some work ahead of himself in light of these recent seemingly disconnected moves.

But here's an interesting thought: the fact that Microsoft is even thinking of buying a stake in Facebook is telling on some levels. For one, it could possibly mean that Microsoft is still suffering from the halo-effect that Google has created on the Internet which has caused Ballmer & Co. to react (in some cases) very irrationally. Second, I wonder if Microsoft is in fact worried about Zuckerberg's aspirations for his exploding site. Earlier speculation had Facebook potentially becoming a next generation OS, if you recall. Is this Microsoft's way of keeping the enemy nearby?

It'll be very interesting to see how this discussion between Microsoft and Facebook turns out.

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