A Facebook Acquisition

by Jordan Moore

On September 27th, 2006, Facebook.com took its next step toward becoming a global force. In fact, the social networking site recently became more available, opening its electronic doors to anyone with an e-mail address. While some Facebook users favor this change, others view it as the ultimate marketing scheme. Statistics show that of the supported high schools and colleges in the United States, about 9.5 million of the students have a registered Facebook profile (Fong). Of those 9.5 million, about 60% log in on a daily basis (Fong). This massive usage has led Facebook.com to reported advertising revenue of $1 million dollars a week. These numbers have lead to rumors of a Facebook acquisition from numerous corporations throughout the world (Graham). The staff at Facebook has allegedly been asking for nearly $2 billion dollars to sell their site. Yahoo, Microsoft, and Viacom have been rumored to be in talks with Facebook's founder Mark Zuckerberg.

What would Yahoo want with Facebook? The answer is pretty simple. Yahoo has tried for years to integrate social networking into its site. Yahoo Groups, Yahoo Chat, and Yahoo Personals are all examples of social networking failure. Even today, the company has their Yahoo 360 service, a mixture of a blog network and an online social network, which has met with only mediocre popularity. Mark Zuckerberg recently declined an $800 million offer from Yahoo (Delaney). If an agreement is made, a Facebook acquisition will move Yahoo from second place in online advertising to first, and will also increase traffic to the site. Ever since Google came onto the scene, Yahoo has taken a serious hit in site traffic (Thaw). If Yahoo purchased Facebook, they could even require users to register for a Yahoo account in order to log into the site. Facebook could potentially fit in at Yahoo-but would it fit in better at Microsoft?

In recent months the Facebook staff has had meetings with Microsoft about a possible buyout (Delaney). If the deal goes through, Microsoft could jump from number three in online advertising to number two or one. It would also give them a platform to release new product demos. If Microsoft required Facebook users to register for a Hotmail address or a Windows Live account, the company could regain its market share in free e-mail service. Like Yahoo, Microsoft has lost ground to Google's GMail system in recent years. For current Facebook users, a Microsoft acquisition would mean a stable environment with a massive capital backing. Microsoft would be able to provide a large growth environment for Facebook, but would Viacom be able to provide more for the Facebook.com users?

Viacom is the company that owns and operates MTV, VH1, and Comedy Central. Industry analysts speculate that Facebook and Viacom would be a great match (Rosenbush). Facebook could become Viacom's ultimate marketing research tool. A feature already integrated into Facebook is "The Pulse." This feature grabs information from each person's profile and then displays it however Facebook wants. Movies, books, and music are included in The Pulse. For example, The Pulse can list the top ten movies that users have listed on Minnesota State University - Mankato profiles. Then, it can compare that data to the state, region, or to another university. This feature tracks plus and minus point changes for each piece of information on every profile. If Viacom were to acquire Facebook, it would be able to track this information and provide per-user advertising. One person might see ad banners for his favorite band or a related music genre while another user might see an ad banner for the sequel to her favorite movie.

In the past three years, Facebook has grown to be a major force in the online social networking scene. Only time will tell which, if any, major corporation will acquire Facebook. Will Yahoo be able to incorporate its now defunct Yahoo Chat into Facebook? Will Microsoft force Facebook users to have a Hotmail account to log in? Will Viacom be able to tailor its advertising to specific regions or personal users? No matter what happens, not everybody will be pleased with the outcome. Some will view a merger as an online monopoly and others will wonder how far personal information is spreading. However, people will continue to log in daily to use all of Facebook's features and services.

Works Cited:

Delaney, Kevin. "WSJ.com." Facebook, Riding a Web Trend, . 21 Sep 2006. Wall Street Journal. 27 Sep 2006

Fong, Kelly. "Facebook opens to all users." 09 Sep 2006. The Stanford Daily. 29 Sep 2006

Graham, Jefferson. "Yahoo, Microsoft Check into Facebook." 21 Sep 2006. USA Today. 29 Sep 2006

Rosenbush, Steve. "Facebook's On the Block." 28 Mar 2006. Business Week. 9 Sep 2006

Thaw, Jonathon. "Yahoo! Gives up quest for search dominance." 24 Jan 2006. Bloomberg News. 2 Nov 2006

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