Microsoft and Facebook partnership
Posted by eileenb on October 26, 2007
I’ve been watching the news about our partnership with Facebook with interest, and following all of the different perspectives on the negotiations.
We announced an “equity investment” which means we’re entering into an advertising syndication partnership. We’ve done the same sort of thing with Piczo and also with Digg. It allows us to expand our digital advertising. Hoovaloo thinks Facebook is a timewaster (and it’s certainly possible to waste an inordinate amount of time on there), Ahmed also has some thoughts worth thinking about how we valued Facebook. Marc seems to have the best take on this (if you’re looking at this in a Mergers and Acqusitions sort of way). As he says:
“What does this deal do?
- Buys probably the equivalent of 10’s or possibly close to 100 million dollars worth of PR. Online, paper and TV. Screen real estate for 3 months as people speculate. So their Facebook spend isn’t 260mio already it’s a lot less.
- Wash Facebook brand onto Microsoft’s brand.
- Makes it easier for Microsoft to buy a blocking stake later. They already have a start now.
- Buys Microsoft time and holds other players out. Other suitors will have their shoulder devil telling them this might be too hard. It’s Microsoft after all, a no debt cash rich company.
- It keeps Facebooks management thinking Microsoft loves them. Microsoft might not love them they just want their new date to think that so they don’t sleep with anyone else.
- Opens compulsory dialogue between the companies. Microsoft is now an investor.
- Equity blood brothers never slag each other and will tend to cross promote better. What would you pay Facebook to be a channel partner for your software company if you have one?
- Microsoft undoubtedly starts to get some influence in Facebook product direction or at least learns what the next steps are.
- Facebook will look to impress it’s big daddy by considering everything Microsoft asks for. Microsoft have a big fat chequebook, wouldn’t you get on your knees? Plus you would never bite that big Microsoft mitt of a hand, it might just feed you a lot of green.”
But I think we’ve invested in Facebook to get closer to the social networking phenomenon that’s sweeping around the web. And in a couple of years – I wonder what we’ll announce…
What do you think?
Sevaan said
Hey Eileen,
First off, great blog. I’ve added it to my bookmarks and will check back regularly.
Secondly, I run Hoovaloo.com (thanks for the link back) and aren’t exactly sure where you got the impression that we think Facebook is a waste of time. We don’t think that!
Each of us on the editorial staff have Facebook profiles, and it’s the only site we use for social networking. Sure you can spend a lot of time on the site, but is it a “waste of time”? It all depends on your perspective, I suppose. A glass half-full/half-empty sort of thing, and we at Hoovaloo are optimists.
If we feel anything about Facebook though, it’s just intense jealousy that a) we didn’t start the site ourselves, and b) we don’t hold any equity in it.
Anyway, have a great day! And thanks for visiting Hoovaloo.com!
Sevaan said
Hey, it’s me again. I think I spoke too soon. I was looking at the wrong Facebook article on Hoovaloo.com. Apparently Dave, one of our contributors, DOES think it’s a waste of time!
From now on, I will only speak for myself. Lesson learned!
/humbled.