Microsoft Corp.'s $240 million investment in Facebook Inc. -- a three-year-old company with more promise than profit -- represents a huge bet that the online advertising boom will continue and the popular social networking site will be among the biggest beneficiaries.
[Faceoff]
The software giant said yesterday that it will buy a 1.6% stake in Facebook, beating out Google Inc. after intense lobbying. The deal places a $15 billion valuation on the closely held Palo Alto, Calif., start-up. Facebook, which runs a site where people set up personal Web pages, expects to break even this year, on a cash-flow basis, with revenue of $150 million, according to people familiar with the company.
Facebook and Google move further into the competition for controlling the social graph. Microsoft's money give Facebook a little bit of a breathing room to improve their technology.
Also, it reminds me the early days of Internet Search engines when banner ads were all the rage. This is another sign that there's no new social networking business model yet. Good :)
From a system evolution perspective, the synthesis stage in social networking is over. Time to invest in performance improvement and discovery of a new business model. Remarkably, Google has not come up with anything new since search relevant ads.
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