Last week Microsoft announced plans to acquire a 1.6% interest in the social networking Web site Facebook. The sale price on paper was US$240-million; in theory that means that the great minds at Microsoft believe the whole of Facebook to be worth about US$15-billion. It's the culmination-- though perhaps only the first --of an amazingly successful game of chicken between Facebook CEO Mark Zuckerberg and the rest of the tech world. Zuckerberg's creation is not yet four years old, and he is only 23, yet for months he had the guts to fend off lower valuations of the site -- in the form of deals that would have guaranteed the financial independence of his great-great-grandchildren -- while Facebook continued to snowball and gain pop culture traction. Most notable of the offers that we know about was Yahoo!'s 2006 bid of a cool billion, which now seems like a positive insult. Facebook's market value now compares in theoretical magnitude to that of the Ford Motor Company (US$18-billion), Xerox (US$16-billion) or Enbridge ($15-billion).
The $15-billion number probably shouldn't be taken too seriously, for better or for worse. Stock-watchers will recognize it as being the sort of in-between sticker number that any marketplace will slap onto an extremely promising new player run by smart people whose actual financials could settle in anywhere down the road. "Real" tech companies are worth a lot more. $15-billion is like a bridge convention; it's a bid that says "This isn't a penny stock anymore, but ?" On the other hand, the deal doesn't come with the premium that a buyer for all of Facebook would pay for control of the company and denial of access to competitors. Microsoft is now firmly on board as an advertising partner, but Google and Yahoo are still circling menacingly overhead, waiting to see if Zuckerberg is willing to take Facebook to yet another level of user-base penetration. Can they all afford to resist buying out what could become the next Google?
And what would they be paying for exactly? It is hard to explain if you are not already on Facebook, though if Alexa.com's (admittedly sloppy)Web traffic measurements are anywhere near correct, you probably are: the site is now rated the single most-visited by Canadian users, is #5 in the U.S., and stands at #7 globally. A value of US$15-billion seems like the symptom of just so much irrational exuberance in the tech market if you try to break down what Facebook does: namely, allowing users to share personal news, event plans, photos, private notes, tastes, hobbies and political passions with selected friends over a single platform.
The skeptic will ask what you can do with Facebook that you can't do with an e-mail account. And the correct answer to this is "absolutely nothing." We haven't seen a single Facebook sub-application that couldn't in principle be handled by e-mail. Sending valentines? Announcing travel plans? Instant messaging? Playing chess? People were doing these things on the Net before there was a graphical Web browser. Or, for that matter, a Web.
But it would be a mistake to judge Facebook in this way. Just for starters, the full answer to "What can you do with Facebook that you can't do by e-mail?" should probably be "Nothing, but have you checked your e-mail lately?" There is plenty of what you might call spam on Facebook, but you can rest assured that every last bit of it was put there deliberately by someone you originally chose to add to your friends list, and you retain the power at all times to choke them off or drop them.
But this is the least important part. You know a technology holds real promise when people are comparing it to a drug: the joke of calling Facebook "Crackbook" is already stale. What Facebook really provides is the best existing solution to the problem of how to create stable online social presences. It's like a sticky bulletin board that incorporates e-mail and photo-sharing and event calendaring; unlike a physical bulletin board, it is unconfined by geography, but strictly confined by the limits of your own social circle. You're barraged with notices and status updates from the people you've chosen, and you're not forced to rummage through the weird garage sale and lost-dog notices from the people next door. At times the news feed takes on the texture of a personalized soap opera, only the heartbreak and triumph are real. So-and-so got mugged last night; so-and-so quit his job; so-and-so is no longer listed as single.
Marshall McLuhan, the great Canadian media theorist who died before the Internet came along and we needed him the most, spoke of the technological emergence of a "global village." The metaphor has, honestly, always seemed like a bit of a stretch until now. Television, for all its power, has made us part of an ultimately unconvincing village of tiresome politicians and intoxicated, undereducated celebrities; it has forced us to live with the people who live to be on TV, and has thus remained a little artificial. Facebook ups the ante. At its best it feels like the solid back fence of a global village, one with endlessly overlapping social circles.
The last Web site that grew so fast and offered such a convincing promise of future ubiquity was Google, which is worth US$211-billion right now. It's just possible Microsoft is getting a bargain.
Last week Microsoft announced plans to acquire a 1.6% interest in the social networking Web site Facebook. The sale price on paper was US$240-million; in theory that means that the great minds at Microsoft believe the whole of Facebook to be worth about US$15-billion. It's the culmination-- though perhaps only the first --of an amazingly successful game of chicken between Facebook CEO Mark Zuckerberg and the rest of the tech world. Zuckerberg's creation is not yet four years old, and he is only 23, yet for months he had the guts to fend off lower valuations of the site -- in the form of deals that would have guaranteed the financial independence of his great-great-grandchildren -- while Facebook continued to snowball and gain pop culture traction. Most notable of the offers that we know about was Yahoo!'s 2006 bid of a cool billion, which now seems like a positive insult. Facebook's market value now compares in theoretical magnitude to that of the Ford Motor Company (US$18-billion), Xerox (US$16-billion) or Enbridge ($15-billion).
The $15-billion number probably shouldn't be taken too seriously, for better or for worse. Stock-watchers will recognize it as being the sort of in-between sticker number that any marketplace will slap onto an extremely promising new player run by smart people whose actual financials could settle in anywhere down the road. "Real" tech companies are worth a lot more. $15-billion is like a bridge convention; it's a bid that says "This isn't a penny stock anymore, but ?" On the other hand, the deal doesn't come with the premium that a buyer for all of Facebook would pay for control of the company and denial of access to competitors. Microsoft is now firmly on board as an advertising partner, but Google and Yahoo are still circling menacingly overhead, waiting to see if Zuckerberg is willing to take Facebook to yet another level of user-base penetration. Can they all afford to resist buying out what could become the next Google?
And what would they be paying for exactly? It is hard to explain if you are not already on Facebook, though if Alexa.com's (admittedly sloppy)Web traffic measurements are anywhere near correct, you probably are: the site is now rated the single most-visited by Canadian users, is #5 in the U.S., and stands at #7 globally. A value of US$15-billion seems like the symptom of just so much irrational exuberance in the tech market if you try to break down what Facebook does: namely, allowing users to share personal news, event plans, photos, private notes, tastes, hobbies and political passions with selected friends over a single platform.
The skeptic will ask what you can do with Facebook that you can't do with an e-mail account. And the correct answer to this is "absolutely nothing." We haven't seen a single Facebook sub-application that couldn't in principle be handled by e-mail. Sending valentines? Announcing travel plans? Instant messaging? Playing chess? People were doing these things on the Net before there was a graphical Web browser. Or, for that matter, a Web.
But it would be a mistake to judge Facebook in this way. Just for starters, the full answer to "What can you do with Facebook that you can't do by e-mail?" should probably be "Nothing, but have you checked your e-mail lately?" There is plenty of what you might call spam on Facebook, but you can rest assured that every last bit of it was put there deliberately by someone you originally chose to add to your friends list, and you retain the power at all times to choke them off or drop them.
But this is the least important part. You know a technology holds real promise when people are comparing it to a drug: the joke of calling Facebook "Crackbook" is already stale. What Facebook really provides is the best existing solution to the problem of how to create stable online social presences. It's like a sticky bulletin board that incorporates e-mail and photo-sharing and event calendaring; unlike a physical bulletin board, it is unconfined by geography, but strictly confined by the limits of your own social circle. You're barraged with notices and status updates from the people you've chosen, and you're not forced to rummage through the weird garage sale and lost-dog notices from the people next door. At times the news feed takes on the texture of a personalized soap opera, only the heartbreak and triumph are real. So-and-so got mugged last night; so-and-so quit his job; so-and-so is no longer listed as single.
Marshall McLuhan, the great Canadian media theorist who died before the Internet came along and we needed him the most, spoke of the technological emergence of a "global village." The metaphor has, honestly, always seemed like a bit of a stretch until now. Television, for all its power, has made us part of an ultimately unconvincing village of tiresome politicians and intoxicated, undereducated celebrities; it has forced us to live with the people who live to be on TV, and has thus remained a little artificial. Facebook ups the ante. At its best it feels like the solid back fence of a global village, one with endlessly overlapping social circles.
The last Web site that grew so fast and offered such a convincing promise of future ubiquity was Google, which is worth US$211-billion right now. It's just possible Microsoft is getting a bargain.
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