Report: Google and Microsoft slobbering over Facebook

Facebook will sell a minority stake and is close to choosing between Microsoft and Google, according to press reports.

Like rival lovers, Google and Microsoft are intensely courting Facebook, as the social-networking upstart picks petals off a flower -- "she loves me, she loves me not" -- and tries to decide which of the two will be allowed to buy a minority stake in the company, according to press reports.

The Wall Street Journal and The New York Post reported Wednesday that Facebook will likely make a decision within a day or two, and that the chosen company will also get a deal to provide ads for the social network's sites outside of the US.

Google, Facebook and Microsoft all declined to comment when contacted by IDG News Service.

Founded in 2004, Facebook's popularity has skyrocketed during the past year or so. Its user ranks have increased to about 47 million active users today from 12 million in December. Over half of its active members return to the site daily.

As such, it is perceived as an attractive vehicle for online advertising, although some industry experts question how effective social-networking sites are for advertisers.

In a social-networking site, particularly one as restricted as Facebook, people mostly visit the pages of their acquaintances, to see their latest comments, photos and videos.

For Facebook, MySpace and other social sites like YouTube and Flickr, it's still unclear whether enough advertisers will feel comfortable running their ads on pages with potentially objectionable material whose creation is largely unregulated and created by millions of individuals.

Facebook will likely share ideas for revving up its advertising business on November 6, when it holds an event in New York to which it has invited what it calls "its closest advertisers."

"As part of [the event], Facebook executives will discuss new approaches for advertising online," a Facebook spokeswoman said via e-mail. "We are not sharing any further details."

In addition to the advertising questions, Facebook, MySpace and others are in the crosshairs of law enforcement agencies in the U.S. and abroad because sexual predators use social-networking sites to stalk and victimize people, in particular minors.

Still, Facebook is the Internet company with the loudest buzz now, and the anonymous sources for the Journal and the Post articles suggest that the price of the minority stake in play gives Facebook a total valuation of between US$10 billion and US$15 billion.

Both newspapers reported that in addition to Google or Microsoft, other investors might be involved in the acquisition of the ownership stake.

The Journal first reported Google's and Microsoft's pursuit of the Facebook investment a month ago.

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Juan Carlos Perez

IDG News Service
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