Google has thrown a sheep at Microsoft

Last Thursday, the news came out that Microsoft is plunking down $240 million for a 1.6% stake in Facebook. That’s on top of the 5% stake that Microsoft was already willing to buy. This stake values Facebook at $15 billion. Hah, and everyone thought that Mark Zuckerberg was stupid when he turned down the $1 billion offer from Yahoo a few years ago.

Really? $15 billion?? Is Facebook honestly worth it? I think I’m going to go with… no. Sure, it’s a great place to spend your time online and aggregate your life all into one website, but how is it worth $15 billion? I wonder if they knew they were paying too much, which was why the news was released the day before they released their third quarter earnings – a report which made their stock jump 9.5% the next day in order to cover their asses.

I was asked in an interview recently why I thought Microsoft would be willing to pay so much for Facebook. I think that Microsoft’s reasoning is that Facebook has flyers and banners that can target individual users based on what they like according to their profiles. They have access to demographic information that, though cannot be traced back to individual people, nevertheless are available through massive databases. They will also have an exclusive deal to show banners. But I also mentioned that most people I talked to never actually look at the Facebook flyers. And they may look at the little ads stuck into the news feed, but only because they have to. The people in our generation have become pros at avoiding online ads.

I personally think the people at Google are laughing their asses off at getting Microsoft so scared that they would do something like this. Google doesn’t need Facebook for ads – it has the rest of the web. Microsoft was just scared that it would lose out on another opportunity just like how people don’t use Live Search unless they’re too lazy to change the default Internet Explorer settings.

Source: http://www.nytimes.com/2007/10/25/technology/25facebook.html?_r=1&oref=slogin

Sarah