Did Google bluff Microsoft into over paying for Facebook?

Did Google bluff Microsoft into over paying for Facebook?

Summary: It sure looks like itMicrosoft pays $240 million for a stake that values Facebook at an astounding 150x of revenue - $15 billion dollars.A week later, Google announces Open Social, a competitive platform with partners including LinkedIn, Hi5, Friendster, Salesforce.

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It sure looks like it Microsoft pays $240 million for a stake that values Facebook at an astounding 150x of revenue - $15 billion dollars.

A week later, Google announces Open Social, a competitive platform with partners including LinkedIn, Hi5, Friendster, Salesforce.com, Oracle, iLike, Flixster, RockYou, and Slide. That deal that took longer than a week to structure.

Plan A or Plan B? Was Google ever serious about Facebook, or did they just want to see Microsoft invest more of their battered prestige in another closed platform?

Probably they didn't much care how it came out. Google could have paid the $240 million just as easily as Microsoft. Money wasn't the sticking point. Microsoft promised something that Google didn't. Microsoft must have promised to keep Facebook closed.

Bet it was fun to see how far a-desperate-for-coolness Microsoft would go to "beat" Google.

Is Facebook a platform or a launch platform? Facebook has a lot of traction as a platform for software developers. Google's Open Social platform takes advantage of that. According to Marc Andreessen

Today's Facebook app developers just got very good news -- they will be able to take all of the work they did to . . . as many as 100 million users just via the initial Open Social partners, more than twice as many users as Facebook has today.

As an app developer, there's no real reason to choose between Facebook and Open Social. It's easy to do both. You've already put in most of the effort -- creating a new set of front-end HTML and Javascript pages is almost trivial, and that's all you need to do to have your app "port" to Open Social and work within Open Social containers like Ning, Orkut, Hi5, and LinkedIn.

It looks like Open Social is not simply drafting on Facebook's momentum, but actually looking to subsume it into the larger audience. Today, Facebook has the momentum. But as the Open Social community builds more developers will have to choose who to develop for first. It may take a year or two, but the momentum will shift.

The Storage Bits take Facebook helps keep Microsoft in the Internet advertising game. But they've been out played by Google. Microsoft over payed for a sliver of Facebook and in a year Ballmer will look like he was caught short yet again.

Comments welcome. If you disagree, why?

Topics: Banking, Collaboration, Google, Microsoft, Social Enterprise

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4 comments
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  • Too funny!

    I just subscribed to your feed, somehow I missed it all these months...
    BillyG_n_SC
    • That's not all . . .

      Check out <a href="http://storagemojo.com/"
      target="_blank">StorageMojo.com</a>.<br>
      <br>
      Robin
      R Harris
  • Making some major assumptions

    You are of course assuming all the people can't wait to leave facebook for all the other sites, and that facebook won't just adopt the OpenSocial API (if it really is open), become the main portal, with all the others providing content.

    Not saying it couldn't happen, just that odds are probably about even for going either way.

    That would still put the vast majority of ad revenue from the model into Facebook/Microsoft's pocket.
    sbmorgan
  • RE: Did Google bluff Microsoft into over paying for Facebook?

    It's not about the valuation. It's about Microsoft
    putting up a small ante to get into the game.
    Whatever Microsoft gave Facebook, it was
    peanuts to B Gates...

    www.thechinagame.com
    Paul Midler