Web war 2.0

The social networking field is being touted as a potential battleground again this week, and once more it’s Facebook that forms the spoils.

Last Updated: 31 Aug 2010
The latest news is that Microsoft is apparently keen to get involved with Facebook – much like the vast majority of twenty- or thirty-somethings right now. (The site originally aimed to achieve 40 million active users by the end of this year, but it has hit that target already, and is now chasing 60 million.)

Hence Microsoft’s interest. According to reports, this may involve a bid of between $300m and $500m for a 5% stake in the site. For the money, Bill Gates’ crew would get a much-needed foot in Web 2.0, as well as a share in technology that would boost its growing advertising interests. Both factors would also enahnce its appeal on Wall Street – Microsoft stock is currently around half its 1999 peak.

The move would also strengthen Microsoft against its rivals, who have scored some successes over the software producer of late. Google, for example, beat it in an auction for DoubleClick, the largest broker of online banner ads, earlier this year. That after poaching YouTube last year, and winning the contract to supply advertising to MySpace, Facebook’s main rival.

Given the amount of lip-service, Facebook would certainly seem to represent some rather mouth-watering war booty. But potential investors should perhaps exercise caution. It may be spoken of as a $10bn company, but it is on track this year to post estimated revenues of only around $100m. Before charging in, Bill Gates and other potential campaigners would be wise to ‘do the math’.

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