By Stefan Swanepoel
RISMEDIA, Sept. 28, 2007-Barely a year ago on October 9, Google laid claim to their largest acquisition to date as they triumphantly announced the acquisition of YouTube for $1.65 billion in an all-stock transaction. YouTube had been created merely 20 months earlier in February 2005 by three former PayPal employees and was little more than Adobe Flash technology used to display video content and movie clips. Yet it had made the July 2005 sale of buddy site MySpace to Rupert Murdoch’s News Corporation for $580 million look like chump change.
It’s September 2007 and the streets are full of a rumor talking about Microsoft looking into taking a 5% equity stake in Facebook. That move could value the company at around $10 billion. Of course we can be certain that cash- flush Google won’t let such overtures go by without inviting themselves to the dance.
Created about six months after MySpace, the competing social networking site founded by Mark Zuckerberg was initially restricted to students of Harvard College – completely opposite to the “free for all” structure of MySpace. Within two months it was expanded to all Ivy League schools with many universities added in the following year. Next came high schools and some large companies. As of July 2007, the Web site had the largest number of registered users among college-focused sites with over 34 million active members worldwide.
These original restrictions limited the growth of Facebook in comparison to MySpace but laid the foundation for a more formal, serious and professional network. Then in September 2006 Facebook opened its doors to allow anyone to join by selecting one or more participating networks, such as a high school, place of employment or geographic region. During the subsequent 12 months Facebook exploded rising in ranking from the 60th to one of the 10 most visited web Web sites in the United States.
The number of unique visitors 35 and older doubled during the same time and the new demographic started to shape a new chapter in this “book.” This slightly “older and more mature” crowd, compared to the typical “MySpacer,” suddenly saw a new business tool rather than just a social network.
Today the Web site boasts that it has accumulated most of its 40 million members in just the past few months. Even more astounding is the fact that last month Facebook officially overtook MySpace as the most popular social network, receiving 6.5 million unique visitors compared with MySpace’s 6.4 million. So now you know why Facebook is currently the hot flavor of the month.
But why Microsoft you may ask?
Well, Facebook signed a deal with Microsoft in August of last year just before Facebook threw their doors open. Microsoft was given the rights to be the exclusive provider of banner advertising and sponsored links. The deal reportedly guaranteed $200 million in ad revenue through 2008.
But don’t count Google or Yahoo out just yet.
All three of these giants run sophisticated technology for selling advertising space on Web sites, and eyeballs is the name of the game. Both Google and Microsoft have already purchased specialist ad agencies this year – respectively, DoubleClick and aQuantive – and are ready to serve up ads just about anywhere.
So it looks like a face off between Microsoft and Google with hats off to founder Zuckerberg, who still only 23, is on the verge of most likely becoming the youngest self-made billionaire of all time.
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