Spurned Microsoft (MSFT) is now sending flowers to another Valley belle, Facebook, and this time she’s actually a spring chicken. As soon as this news hit the tape, our technology advisor Dwight Merriman ran over to the newsroom and made the following points in favour of this deal (as opposed to that old one):
- Unlike Yahoo (YHOO), Facebook is the global leader in its business.
- Unlike Yahoo, Facebook is a company on the rise.
- Unlike any other potential Facebook acquiror, Microsoft doesn’t need revenue, so that little problem Facebook has right now–no real business–is irrelevant.
- Unlike Yahoo, Facebook is rapidly becoming the social operating system for the web–the platform that thousands of developers build applications on top of. This fits with Microsoft’s penchant for other kinds of operating systems.
- Tons of wonderful intergration opportunities between Facebook and Outlook/Exchange, Microsoft Messenger, etc., all of which would help both companies.
- Huge captive Facebook audience in which to install Microsoft search, thus increasing Microsoft’s pathetic query share.
- Microsoft already owns 2% of Facebook and knows business well.
Yes, you say. But Zuckerberg would never sell to Microsoft.
Don’t forget that when Zuckerberg held up Microsoft for that $15 billion valuation, we were pre-Beacon. In those days, Zuckerberg was of the opinion that Beacon was the most important advertising innovation in a century, and he might well have been able to persuade a desperate Microsoft of that.
But since then:
- Beacon has flopped (at least so far),
- Social-networks are increasingly perceived as nearly worthless inventory
- Facebook’s growth is slowing
This isn’t to say that Zuckerberg WANTS to sell–just that he might be more willing to entertain the idea. Also, Zuckerberg is smart enough to know that, the moment the “Microsoft-Facebook talks” leak hits the Wall Street Journal, Eric Schmidt is going to be bounding up and down on his front stoop with a counter-offer like a labrador. And Zuckerberg is also smart enough to know that a bidding war between Microsoft and Google could produce some pretty pleasant results ($6 billion for aQuantive?).
Also, since Mark Zuckerberg has already been crowned the “next Bill Gates,” he might find it amusing/ironic to join forces with the old one.
Lastly, the rise of Google and the spectacular flame-out of the Yahoo deal has made the impossible happen–which is that now Microsoft actually seems a bit more sympathetic. Suddenly, a Valley company selling out to the Evil Empire doesn’t seem so traitorous anymore. In fact, the idea of it might even appeal to Zuckerberg’s rebellious side. (I’m CEO, bitch).
So, no, Zuckerberg is obviously not looking to sell–not with all those senior folks he hires from Google every week. But if Microsoft dangles, say, $15-$20 billion in cash in front of him–less than half of what it would have had to spend on the purple and yellow senior community centre across the way–we think he might at least listen.