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Why Microsoft Needed Facebook & Google Didn’t

image So, after weeks of speculation, Microsoft won the battle over Facebook, with Google second, and Yahoo embarrassingly nowhere to be seen. While it may seem that Google’s lost momentum–by not partnering with Facebook–I see it more as a sign that Microsoft knew Facebook was its only hope.

Let me explain.

Social networks are hot, hot, hot, right now. It doesn’t really matter which one you prefer–MySpace, Bebo, Facebook, or Dogster–social networks are the next evolutionary step in the growth of the internet. Now that we’ve all learned to check our email, order online, research restaurants, and read news, we’re starting to use the web to connect with each other. We’ve realized that we enjoy making connections, sharing our random thoughts, and turning our friends into virtual zombies. Social networking is the second generation internet.

Facebook Sells 1.6% to Microsoft for $240 Million

In a conference call a few minutes ago, Facebook and Microsoft announced a deal that sees the software giant taking a $240M investment in the social network.

Here’s the press release:

PALO ALTO, Calif., and REDMOND, Wash. — Oct. 24, 2007 — Facebook and Microsoft Corp. today announced that Microsoft will take a $240 million equity stake in Facebook’s next round of financing at a $15 billion valuation, and the companies will expand their existing advertising partnership. Under the expanded strategic alliance, Microsoft will be the exclusive third-party advertising platform partner for Facebook, and will begin to sell advertising for Facebook internationally in addition to the United States. Financial terms were not disclosed.

Facebook Sets the Date (for New Ads)

No, Facebook isn’t announcing the date for its impending nuptials, but it’s sent out engraved invitations (literally) for an event next month in New York, as AdAge writes:

The invitation, sent to advertisers and agencies in New York, arrived carved onto a Lucite brick:

“You are invited to a discussion with Mark Zuckerberg and the Facebook executive team as we unveil a new way of advertising online.”

AdAge speculates that this could be the unveiling of the meaning of a term first used and trademarked by Facebook last month, “SocialAds”:

described as “advertising and information distribution services, namely, providing advertising space via the global computer network [and] promoting the goods and services of others over the internet.”

MySpace Dominates in the US

Datamonitor predicts that social networking sites will level off around the world in the year 2012. They also predict that the plateau will hit even sooner in the US. In the meantime, global active memberships in social networking sites are growing. They’re expected to reach 230 million at the end of 2007 (this includes multiple memberships by one person).The money is good and growing.

For example, my friend’s Facebook App that took two weeks to build recently sold for $25k. And marketers who are savvy are getting a lot of press for their social networking presence. There is a lot of money and creativity being exchanged. “Revenues from social-networking services should reach $965 million, growing to $2.4 billion by 2012, writes MarketingCharts.”

Rumor Mill: Microsoft & Google Vie for Facebook’s Hand in Marriage

image The New York Post is bold in its prediction that Facebook will announce which suitor will win its hand in marriage, in the next 48 hours.

It seems it’s a two-horse race with Google and Microsoft both vying to buy a 5-10% stake in the social network.

The Post suggest Google’s trying to run-up the price to try and scare off Microsoft. It doesn’t appear to be working…

…Microsoft is hanging tough, despite recent comments by CEO Steve Ballmer that social-networking sites were “a bit faddish.” One source said the Redmond, Wash.-based company is “willing to give any valuation possible” to keep Facebook away from Google.

Is Virtual World Advertising Harmful to Kids?

Execs from social networking sites recently met and talked about marketing to children. The question was raised in a series of articles about who is watching out for children and pointing out that there are no standards in this arena.

Marketing to children isn’t new. However, social networks have a strong pull because they are so engaging and it’s easy to spend a lot of time interacting on a site. It’s more than passive viewing like other forms of entertainment, like watching tv. Online it’s even easier to blur lines between what’s real and what isn’t. That’s true even for adults.

Chinese Government Censoring US Sites?

Last week TechCrunch told how the Chinese Government was redirecting Google, Yahoo, and Microsoft searches to its own search engine Baidu. The post had 145 comments when I last visited. Paris-based Reporters Without Borders noted that YouTube and Google blog search were blocked along with search engines.

Google’s response to an inquiry by Search Engine Land about blocking sites and redirecting them :

“We’ve had numerous reports that Google.cn and other search engines have been blocked in China and traffic redirected to other sites. While this is clearly unfortunate, we’ve seen this happen before and are confident that service will be restored to our users in the very near future.”

Others chimed in with different theories: