Microsoft has decided it doesn't want Yahoo anymore. It apparently just wants to make a deal for the profitable part -- search advertising. After all, they're desperate enough to increase their market share that they are going to pay people to use their Live Search. Of course that would still leave Google as the market leader.
At the same time, an interesting rumor has surfaced: Microsoft would buy Yahoo Search, then spend a further US$20 billion to buy Facebook. Despite what Mark Zuckerberg says about Facebook remaining independent, it would be difficult to forego that rich an exit.
Facebook is one of several social networks, second only to MySpace and growing rapidly. But while MySpace is still larger, it is the flow of information through Facebook, and the social engagement of its members that makes it important.
The last few conferences I've attended have come to me first, and sometimes only, as Facebook invites. My Facebook friends quickly comment on my new photos, or my birthday, and often prefer sending Facebook messages to direct email. In short, there is a thriving social ecosystem within the walls of Facebook that does not exist elsewhere on the web.
Purchasing Facebook would give Microsoft access to over 60 million captive, and very social users, who could potentially be used to drive the growth of Live Search -- as well as access to all of their information, and in some cases their entire social lives.
Robert Scoble suggests that this would allow Microsoft to lock Google out of a huge chunk of internet information. That assumes that Facebook stays closed, but companies like Google have done a great deal of work with OpenSocial and data portability, so that is far from a foregone conclusion. As well, Facebook may have a hard time keeping application developers from allowing users to export their own data.
Also, Facebook seems to have no problem disabling accounts. As a user I would be concerned if all of my data just went away one day without explanation, something Facebook users should keep in mind. Do I trust Facebook to protect and keep all of my data for me? No, I'm going to want some way of getting it back out before I depend on it. Until then the data I store there is transient; if it is lost I'll be able to recover it elsewhere.
Facebook simply can't stay completely closed forever, even if they continue to hide specific personal information "for their users' protection". Especially when other competing networks are becoming more open. They will stiff face competition, and new services will debut. For me, Twitter has supplanted a great deal of communication that might have previously happened via Facebook. And Twitter is very open.
Buying Facebook might give Microsoft a small temporary boost. On the other hand, more than 140 million copies of Windows Vista with an Internet Explorer search box directed right to Microsoft Live Search haven't helped much. And Microsoft hasn't really been able to capitalize on user volume of existing services such as Hotmail or MSN instant messaging.
But let's step back a little. Microsoft hasn't detailed its plans yet, and a talk of its plans relating to Facebook is mostly rumor and conjecture. Still, if I were Google, I wouldn't worry too much just yet.
Larry Borsato has been a software developer, marketer, consultant, public speaker, and entrepreneur, among other things. For more of his unpredictable, yet often entertaining thoughts you can read his blog at larryborsato.com.