Posted May 19, 2008 12:40 pm by with 11 comments

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Today’s tech news is full of Microsoft, Yahoo — and now Facebook. Microsoft keeps coming up with ways to buy some part of Yahoo. And now the rumor (reported by Robert Scoble) is that Microsoft may also buy Facebook for $15 to $20 billion. All of this in an effort to compete against Google – or as others suggest – perhaps just to survive.

Here’s the argument: One of the advantages Facebook has is that they do not allow Google to index their internal pages. A lot of their content is walled off and only available within Facebook. So if Microsoft did buy Facebook they could own that piece of the web in which Google can’t occupy (but Yahoo could if Microsoft owned Yahoo search).

TechCrunch suggests rather than buying Facebook, Microsoft ought to work out a deal to index Facebook pages on their search network.

An open Internet is what Google has capitalized on and is what the Internet is built on. Closing it off may give Facebook more leverage, but so far Facebook and Microsoft haven’t been able to monetize Facebook very well. Combining forces is unlikely to help.

I looked up revenues for the companies: Yahoo is at $7 billion, Google is at $16 billion, Microsoft is at $51 billion. Privately owned Facebook, is said to be at $150 million. Microsoft already has a $240 million equity stake in Facebook, based on valuing the company at $15 billion.

In the background Yahoo is trying to stave off Microsoft and improve their search offering.

  • Walling of googlebot could become the hot new way to compete with Google. Everyone chuckled when Mark Cuban suggested this to the ISP’s:

    Maybe he was right?

    Jaan Kanellis’s last blog post..Hey Matt Is Reciprocal Linking Bad?

  • I don’t think I can comprehend that much money! $15billion. wow!
    Oh how I wish my site was worth that much!

    Wii Guy’s last blog post..13 year-old boy involved in high speed car chase

  • Thats just plain nuts. Eventually there will be something to replace it and it will be the newest best thing out there. That is the way the internet works.

  • Hopefully they know of a way to make money with Facebook – otherwise it could just become a good way to blow a few billion.

    I wonder if the executives would be as enthusiastic about working with Facebook if Microsoft bought them out – wouldn’t really have the new “startup” feel.

  • PS3

    Traditional business multiples for acquisitions are around 1.5 times recurring profits. Microsoft are looking to pay 10 times revenues (not profits). That is a staggering sum.

  • Micorosoft needs to start buying small startups with big potential in order to have a better ROI. I think facebook is like a passing fad after a while until a better thing comes along.

    MarketingDeviant’s last blog post..Business Backup Plan for Financial Crisis

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  • I can already see somewhat of a decline in Facebook. That said if anyone can really give it a revamp it would be Microsoft. $15 Billion? I don’t think it’s quite worth $1,5! But hey, the brand is well known. How much do you think Coca-cola is worth? That’s if you could buy every plant in every country? Thats the size that Microsoft is looking for. Added to that, if Microsoft simply integrate a search into Facebook they may even succeed in increasing their search numbers… and in turn perhaps revenue from paid ads.

    Who knows… but $15 billion is a bit much.


  • Does anyone know what happened to this deal? I know the yahoo deal is taking a front seat to this deal but I’d like to see this one go through, as a MSFT shareholder. Look at the return on investment that Murdoch got. MySpace has already been estimated to have payed for itself in earnings, I believe the price was $500 million. Or at least in equity???

    Microsoft should forget yahoo and go for facebook. Keep the CEO on board, keep it fresh and then build their internet presence that way.

    Of course, yahoo would be great too.

    Erik’s last blog post..Wanna Buy Some Blogs?

  • With all of the social networks looking for dominance one may appear that changes everything, if I was in the aquisition or merger departments of these Goliaths I would wait a few months because there is a grumble in the jungle which could well change all. Social networks are notorious for collecting masses of traffic and users but find it difficult to gain substainable revenues.The beast that will emerge has broken the boundaries of all of these problems offering unrivalled revenues for users and the network itself, geared up to deal with the credit crunch users will flock in their millions to this network, this is not just a prediction its as sure as sliced bread over took the loaf. Time will tell… Why spend billions on something that in the 1st quarter of next year will become outdated and obselete? Listen out for ”Whay hay” ”Ca ching” and Oh La la” Its coming and nothing will be able to stopit. With it’s 40+ revenue streams per profile where would you put your money?????