It’s been two days since MicroBook (or Face-o-Soft, if you will), and the dust is finally starting to settle after the announcement. As someone who has watched the company for the past few years, I want to congratulate them – this is a big deal and a major validation. I’ve been collecting a few critical perspectives on the deal – which I’ll share here in a linkdump.
First, regarding the valuation, Nick Carr reports that “[Microsoft's] investment, in isolation, tells us very little about the true worth of Facebook.” Josh Quittner, of Fortune, states that the valuation “that depends on whether you believe Facebook is just the latest online fad—or whether, as Facebookies believe, the social network is building the next, grand computing platform.” The Blogging Stocks asks “Why is $1 of Facebook revenue worth 7.1 times Google’s and 17.5 times Microsoft’s?” Andy Beal sheds some light on “Why Microsoft needed Facebook & Google didn’t.” Finally, Techdirt states:
However, there are still plenty of questions about how much money the site can really generate long term. When Yahoo apparently tried to buy Facebook last year for $1.62 billion, the math still seemed ridiculous and hard to support. To then make the case for a valuation 10x only a year later goes into fantasy territory.
With regards to privacy and identity issues, I found two interesting posts via Doc Searls. The first is a thoughtful piece from Jeremiah Owyang entitled “How Microsoft got their Passport afterall.” Doc’s piece at LinuxJournal also raises some important questions:
Here’s the key fact: Facebook’s users are not its customers. They’re the targets to which Facebook’s customers aim advertising. In old media this was no big deal. But Facebook isn’t just a “medium”. It’s a vast walled garden where the social activity of members and visitors constantly improves the ability of advertisers to “target” both.
For a more pessimistic view, Paul Jacobson reports on a small contingent leaving Facebook after the Microsoft deal. But to where? For Jacobson, and many high-connectivity individuals, new contexts like Twitter, Jaiku or Tumblr. For many without situationally relevant social needs, these networks offer a interesting respite from ego-centric social networks.
My take on the partnership? It’s been the same since I first wrote about it in 2006. Facebook is this generation’s identity archive, and any company with sophisticated data-mining tools can derive significant value from the data. Google’s entire infrastructure is set up around this type of data collection; Facebook just bought it for the steal of 240MM. Here’s what I wrote last year (just s/Microsoft/Google/g):
I’ve gone down this tangent to explain the value of the data Facebook owns. Put simply, Facebook owns the data, use patterns, preferences, communications and adoption trends of the entire next web generation. Whatsmore, the data is incredibly clean, trustworthy, and segmented as a marketer could only dream. But don’t get completely trapped by the marketing aspects, there’s something much greater in Facebook’s data. Facebook owns the data of the first generation to live their entire lives online, a generation that we will spend our lives studying and trying to understand. These young people are out of our frame of reference, and they will completely drive the next 30 years of the social web. Does anyone doubt me on that?
It takes broad thinking, broad ability to operationalize, and a very long view to take on such a project, meaning there are only a few companies that could do it. Boiling it down more, there’s really only one company that I can think of that would actually take a project like this on. It is Google. Google, for all its faults, wishes to deeply understand its users, and it wishes to be part all aspects of our web interaction in the future. An investment of 2BN into a corpus of data like the Facebook’s would be a key strategic acquisition, one that frankly makes sense for a company creatively thinking about the next 30 years.