The Taste Blog

Facebook and the value of blocking Google

In his post, “The $15 billion nonsense”, Nick Carr nails it:

Extrapolating Facebook’s true worth from Microsoft’s investment is a ridiculous exercise … The investment … was a price Microsoft had to pay to nail down the partnership.

Partnering … is far more about gaining future strategic options and blocking the advance of … Google … than about making a financial gain.

This was $240M to gain share for Microsoft’s advertising platform at the expense of Google and Yahoo. It says nothing about the market value of Facebook.

Update: Mike Masnick reports on rumors that some crazy hedge funds might have gone in at the same $15B valuation for Facebook. As Mike says, “Those hedge funds don’t get any of those additional benefits that Microsoft gets.” If true, this news would support a $15B valuation for Facebook, at least if you believe those hedge funds are responsible stewards of their investors’ money.

Update: John Battelle says, “I think no one … has truly grokked what Facebook has a shot at doing - Adsense driven not by search queries, but by personal profile.” Call me a skeptic on this one. I think personalized advertising will produce much higher returns by reaching back to the last action with purchase intent than by targeting a coarse personal profile. (via Geeking with Greg)