Wednesday, September 26, 2007

Microsoft and Facebook and Parakey, Oh My

There has been a lot of coverage, (a whole lot), on the Microsoft overtures to buy a 5% stake in Facebook. I would like to speak to a small aspect of it, possibly under the category of conspiracy theory. MwoohahahahahHAHAHA!!!!

"The Wall Street Journal is reporting that Microsoft is poised to buy 5% of Facebook for $300 million to $500 million, valuing the company at up to $10 billion. Microsoft already handles advertising for the site."

Some of the reports talk about why Facebook might want this kind of relationship. Rather than go public and in need of capital for acquisitions, they can value themselves at a whopping 10 billion dollars and sell off 5% to a giant. See, that’s how easy it is to raise $500,000,000 dollars. This would allow them the ability to do more acquisitions and not have to go through an IPO for the necessary war chest to do so.

Hmmmm…… What does Microsoft get for that kind of money.

J. Nicholas Hoover does a good job of listing out a number of compelling reasons in his posting “What Microsoft Could Do With Facebook”.

What is not present in almost all of the discussions is what I find to be a compelling subplot in the form of Facebook’s first acquisition, Parakey. When this recent acquisition occurred I wondered if there was a move to morph from a social networking site to a web operating system site. That would certainly get Microsoft’s attention.

But in particular, with this investment, Microsoft would have one twentieth control of a company who recently added Firefox contributors Blake Ross and Joe Hewitt to their roster. These Mozilla developers and Parakey founders have been behind some of the biggest Microsoft hegemony threats for some time. Even of Parakey, Ross describes it as "a Web operating system that can do everything an OS can do.".

Ross has also said, “Facebook Platform is finally making it easy to share experiences with friends and family over the web, a goal Joe and I have worked toward for years. We are thrilled to join the most innovative technology company in the industry.”

I wonder how thrilled they are with the possible introduction of this new member of their ownership team.

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