As Microsoft toys with Yahoo over the possibility of a resumed deal to buy only its search business, is it also thinking of throwing Facebook into the mix? That’s the latest rumor making the rounds. Asked about it in Japan, Facebook CEO Mark Zuckerberg danced around the question by stressing his desire for Facebook to remain independent, but declined to comment specifically on whether a sale to Microsoft was in the works. Presumably, though, he wouldn’t be in Japan if any deal was imminent. The only thing that is safe to assume right now is that Microsoft’s corp. dev. guys are talking to everybody else’s corp. dev. guys about any number of combinations or partnerships.
This is not the first time a rumor has surfaced that Microsoft wants to buy Facebook. After Microsoft walked away from Yahoo the first time, there was chatter that Facebook might be an alternative. What is different about this rumor is that it contemplates a combination of Yahoo’s search business with Facebook. Robert Scoble lays out his conspiracy theory about how such a combo would spell the end of the open Web. Scoble points out that stuff on Facebook is not very searchable, but if Microsoft owned both Yahoo’s search engine and Facebook, it could expose all of that social data to Yahoo’s search engine (while keeping it hidden from Google’s). That would give Yahoo’s search engine a leg up on social relevancy and people search, and thus give it a competitive advantage over Google in that area.
There are a few problems with this theory.
1. If opening up Facebook to search really does confer some sort of competitive advantage, there is nothing stopping Microsoft from negotiating a much cheaper technology deal with Facebook to allow its search engine to spider the social network. It doesn’t need to buy Facebook for $15 billion to $20 billion to do that.
2. It doesn’t need to buy Yahoo’ search engine to do that either. Microsoft has its own search engine. If combining search and Facebook really is a game-changer, it would be a (much-needed) game-changer for Microsoft search as well.3. Making Facebook more searchable in and of itself is not a game-changer. Social data exists in many other places as well (MySpace, Bebo, Orkut, Hi5, Twitter, FreindFeed, Plaxo, del.icio.us, StumbleUpon, etc.). If indexing this social data will make search more relevant, it needs to be done across the Web, not just on Facebook. No one deal will solve this search issue.
4. Combining Yahoo’s search engine with Facebook does not solve Facebook’s biggest problem: making money from (mostly display) ads on Facebook. Microsoft is not doing such a great job selling display ads on Facebook already, and the new deal being talked about between it and Yahoo would not include Yahoo’s display advertising business. Arguably, putting together Facebook with Yahoo’s display advertising business would make a stronger combination (assuming that Yahoo has a better shot at figuring out how to monetize social-network ad inventory than Microsoft).
Still, what this discussion highlights is that buying Yahoo’s search business on its own might not do it for Microsoft without combining it with some other move. Microsoft needs to close a deal (any deal) with Yahoo first, though, before it can start moving around other chess pieces. As far as Facebook goes, keep an eye on Zuckerberg. If negotiations with Microsoft get serious, he’ll fly home in a hurry.
Searchers want fast loading, relevant organic SERPs. What does adding Facebook accomplish?
It just appears that Microsoft does NOT really have an intelligent search strategy - despite the hype and promises of the last 4 years.
They simply have to admit this one failure. They don’t have the ability to compete with Google and Yahoo - and that is the bottom line
They did just award their $300 million marketing budget to Crispin Porter + Bogusky who is known for transforming brands. Could be a huge push in the right direction.
Fast Company had a great article on it recently.
Could the solution be to continue to display ads based on your Yahoo search query via FB’s various ad formats, such as news feed ads and display ads? Privacy issues?
Though it’s clearly early days, we are starting to see social data indexed. I’ve certainly found Twitter profiles and posts coming up in some Google searches. (Just for example, search for “Mykl.biz”, and the 2nd-4th hits are Twitter and Jaiku.) Scoble’s concern seems to be that Facebook and Microsoft don’t and won’t share data with the open web. Certainly seems like another reason avoid or minimize one’s use of Facebook.
The combination of Search + Facebook would have nothing to do with searching Facebook. I don’t know how someone that posts for Techcrunch could ever misunderstand something so fundamental.
Hey Eric - it’s not far fetched at all - i reported it last night as a rumor from credible sources here in palo alto - every rumor i posted in the past 6 months has been true (lets see if this one goes down) plus scoble confirmed it on his own as well.
i love your posts and analysis but i’d say that your wrong on all four points in this analysis.. there is a bigger picture out there…if msft grabs yhoo search and fb its a coup and a big advantage to microsoft..
What if Yahoo were to aquire Zoho in a first phase, that would certainly make it more compelling towoards a potential buyer and, who knows, more attractive to Microsoft. Eventually it doesn’t adress the inventory capitalization issue, but it puts Yahoo in an even more competative position vs. Google
I have to agree with #5. You’re so missing the point. The idea is that Facebook will ultimately replace My Yahoo (iGoogle, etc.) as your personal start page. Remember, Microsoft’s core strength is that it gets to dictate the start page to 50 to 70% of the worldwide internet audience, and it’s only through amazing incompetence that it squandered that advantage. Expect FaceBook to become the starting experience to the internet and keep them there with a good search experience. I do have to echo the sentiment expressed above, you guys really need to do some sort of thinking before posting, as much fun as it might be to shoot from the hip in tearing down msft’s strategy, i guarantee you that someone who “get’s” web 2.0 at least as much as you developed it.
rumour or theory? man these lines are getting blurred in unsettling ways…
Merging of these three would make a good challenge to google, would they?
no matter what happens, all of this smoke-and-mirrors has played in msft’s favor - it keeps attention off of the fact that vista is a massive investment that has failed miserably. maybe this is the first salvo in their brand-reshaping effort - DISTRACT.
but if they are serious about FB, this may play out in their favor. as much as i hate FB, it has a long way to go before it burns out and there is a lot a potential acquisitor could do with users who have demonstrated that they LIKE walled gardens…
I heard a rumor that Exxon is looking to buy all of these companies and put these people (and our society) back to work.
for sure .. combining fb and yahoo search is no strategy…that is implied this post wasnt necessary
The search/FB merger kind of makes sense to me. I wouldn’t care if MSFT owns Facebook, as long as they don’t put their logo in there. The same way that I don’t care that Google owns Youtube, because they don’t brand it as theirs.
It’d give me a good reason not to use Google by default. The FB “world” would have to expand so that there would be a lot more available data to search for, though. But it could work.
Microsoft, or anyone for that matter, does not need Yahoo to mine the Social Network space. Ad placement is one thing, but the real money lies in brand monitoring and customer perceptions of products and high ticket durable goods, or even CPG.
My quote, because I am an unappreciated genius that the valley let get away:
“..there is more money to be made in mining Facebook and Myspace for brand and product mentions than all the Google ad revenue, for all time.”
Me, my opinion. The first company to make an open or paid Web Services or REST API IDL for getting brand and consumer opinion out of these social useless cesspools, will be the next Microsoft/ Google Killer.
Just read the Scoble piece and had a nice hearty laugh. Basically he posits that Facebook will be the end-all/be-all of the Internet. Because that FB content will only be accessible to MS/Yahoo Search, Google will be irreparably damaged.
I don’t know. It may be just me. But I would PAY for a search engine that excluded FB content.
No wonder Y! once felt offended…
A search friendly facebook isn’t a big deal. How would you cash in on this kind of search? I think you are giving MS’s strategy too much thought. The strategy is simple: MS is buying whatever it can to increase web presence. Definitely not the strategy of a google killer.
these guys need to talk to me. otherwise they both may be a yahoo in 3- years tops.
I don’t see much MSN presence on Facebook. they should definately put an MSN search bar to along FB users to search the web. Otherwise, everyone just clicks to google when they want info.
Suckerberg is already in bed with M$ but they won’t disclose it for fear of an user stampede.
Nobody trusts M$ and their monopolistic behaviour
Compelling acquisition synergy for Microsoft:
Facebook, Yahoo!, Xobni.
Xobni plugged into Yahoo!’s email extracts and can be used to grow the userbase of the next great platform for Microsoft: Facebook.
Facebook’s & Yahoo!’s exposure would be unmatched to Google’s. Google would be a 1.5 trick pony: search and gmail. F&Y! would be the Internet’s desktop and would even be willing to add google search as a plug-in…or maybe not
Video. 80M viewers in 2 years. Do what you do best. Copy and improve. Here is a company to buy. They have a unique technology.
One of the things I like about Facebook is that it is NOT searchable from the http://www. I mean maybe it would be ok if Facebook gave users the option of making their data searchable or not.
Don’t get me wrong, I’m all about openness but I like Facebook as a PR/social tool, not a personal advertising venue.
This would be the optimal strategy.
Microsoft controls Facebook and Yahoo Ads. This call this new entity, “the devil”.
precondition: openID is common. GPS capable phone.
Facebook is a collosal silo for user behavior, and a platform for developers and businesses to cultivate brands.
The devil monitors user behaviour in conjunction with ‘Fan pages’, sharing, and searching use cases.
Let’s assume Gap is a partner with the devil.
Now let’s suppose from its inconspicous monitoring, the devil knows from your behaviour on Facebook that you have a penchant for blue gap shirts as oppose to red, since you became a Fan of the Gap, spend more time looking @ blue gap shirts ads, or clicked on an ad that had a blue gap shirt,
Now let’s say you’re in the vicinity of a Gap store, say within 1km^2, and access the devil’s search feature (Yahoo or Facebook), or its content sites using your openID. Your GPS location is recorded. The devil knows who you are, where you are, thus your interests and taste, and proximity to centers of fulfillment. Moreover, it knows that within that 1km^2 area there are x% of the area’s population who prefer blue gap shirts to red. The devil relays this information to a GAP server. A GAP process determines that based on the percentage of people who prefer blue shirts, some process business logic, the window display should now have blue shirts as oppose to red. It signals the store manager to do so.
You walk by the GAP store, and notice all the beautiful blue shirts on display. YOu head in, and perhaps buy one.
Now lets generalize this use case to more partners.
The devil generates revenue if its adds value to the ROI of its partners from this telepresence hyper target marketing.
Google might be the database of intentions, but the devil and its predictive strategy, preempts your intentions, and offers you the next best alternative.
Oh snap. Google.
I know this may sound radical or even downright crazy but here it goes: Shouldn’t Microsoft consider acquiring Google… while they still can?
u guys need to get a graphic designer on staff. that graphic is hilarious.
agreed — a facebook/yahoo dual acquisition would be a coup of microsoft and keep them in play for the foreseeable future. don’t understand this post at all.
FB needs a much higher CPM, and Microsoft needs more share in search.
A game changer would be:
a) Integrate MS Searches like local into FB, integrate it with beacon and make it socially aware via geo tagging. This helps Facebook with their CPM because paid search… erm… pays.
b) Make the search much more prominent in the user workflow, getting millions of people to use it daily. Chat is a good example of how facebook is moving in this direction of a portal for the consumer.
c) Bring social ties to the OS — address books, chat clients, and more integration in Windows 7.
This allows Microsoft a competitive advantage over Google because people are ON FB right now. They don’t have to suck eyeballs away to their property. For the consumer, this undercuts going to Google search directly provided that FB/MS can make their search viable and prominent enough.
What would be the value of Facebook if Microsoft wants to buy it.
How much would Zuckerberg get in his pocket?
Definitely not a good combination.
I think Scoble is missing a couple of key points in his analysis…
http://tinyurl.com/3f57ll
I purposely set all of my I.E start pages to google, Because its fast loading, simple, and easy to use.
MSN search loads up slow, is Ugly, and hard to find what you want
If MS takes over yahoo and facebook, and makes it so google cant search facebook, It’ll be a blessing to google.
How many people really want 20,000 pages of self obsessed peoples profiles showing up when they are searching for something useful.
No surprise, offended maybe?