Comments on Microsoft and Facebook

I sent this email to a friend in response to his views on Microsoft and Facebook. I have repalced names and email addresses with *****

Hi *****,

I also have my two cents on Facebook deal and why I think MS paid that kind of money.

To start with, it is not about the advertisement at all. It is also not about buying a stake in the company. 1% is too less a stake to have any meaningful say in the company. Ok, it is meaningful but if I was serious about partnering someone, I would rather take 10% odd stake and make meaningful suggestions to the overall vision of the company.

With 1% MS is saying that they are confident about FB and they like the business and want to be partners.

The reason could be psychological too. May be after Steve Balmer's announcement last month about getting 25% of MS revenues from advertising, they had to show something to the world. May be they wanted to prove something to Google .. ? Who knows. Men do funny things to prove themselves are superiors. Envy and Jealousy are two of the most potent forces in the universe.

As far as exclusive advertising rights, MS already had exclusive rights on FB. This deal just extends those rights to international markets. One might argue that 60% of FB traffic is now international and deal makes more sense, I would say that in web environment, national and international segregation dont really make a sense. If I am in Antarctica and want to advertise about the latest Igloo design, I dont have to advertise from Antarctica, I can advertise from US also.

Now if I was Bill (I hope I was), I would have thought that the entire Social Networking thingy has gone past me without me making any serious inroads (ok, Windows Live was for sometime making people happy but all it has got is measly 10 mn users), how about getting a piece of the pie?

There are more things that aren't really in public domain as yet. Like they have said they would have other partners. They also said that they would not disclose the exact terms of technology exchange that they would have. May be it includes access to user preferences? May be it includes MS and FB's entry in to Software as a Service space? With this they can take Google head on. May be FB will now truly become a platform rather than just a website where you upload pics and poke at firrends?

And did you notice that share price of MS jumped after FB deal was announced .. ?

Regards,
******

P.S.: You have said that it makes "FB, a 100 million OTS website" .. what is an OTS.. ?
P.P.S.: Please share this with your friends also. I want to see if this makes any sense to them. Thanks :)

He had sent his comments on Microsoft's recent stake in Facebook