First YouTube, Now Facebook? Rumors Circulate

Jason Lee Miller
Staff Writer
Published: 2006-10-10


News of the Google YouTube acquisition wasn't even cold yet when a new rumor popped up in the blogosphere that Google is also in talks to outbid Yahoo! on the number two social networking site, Facebook, reportedly offering $2.3 billion.

The rumor began circulating at ThreadWatch, but in light of recent history, and the fact that blogosphere is reluctant to take any type of real propagation credit, we're leaving the Acquisition Alert Level at Blue.

Here's the original claim:

GOOG is looking at Facebook at a 2.3bil price. This could be a total joke on their part, but the source is solid.
A few bloggers have been willing to explore the idea, even if at least two of them are taking credit for propagation if it pans out. If it not true, they're whistling past the scene hoping nobody saw.

On the surface, it may seem right. This same speculation made the rounds last Spring when Google sold off $2.1 billion worth of stock, and some figured it might be to buy Facebook.

And why not? It would certainly thwart rival Yahoo and Microsoft, both of whom have been negotiating with Facebook for months. Yahoo has emerged as the leader in that, reportedly offering $1 billion for it.

Google is sitting on a mountain of cash, too - so much that the feds threatened to categorize the company as an investment fund. So they splurge a little on a social networking site, why couldn't they?

It's not like Orkut's a smash success for them outside of Brazil. And they could add Facebook to YouTube, controlling a huge chunk of the young Internet market while delivering search and search advertising to MySpace. Talk about a leverage move!

But then again, isn't $2.3 billion a little high? Does it take outbidding Yahoo by more than double to win that game? Rupert Murdoch claims Google could have bought MySpace for half the price News Corp. paid for it, if they'd moved in the months before.

Again: Murdoch says Google could have bought MySpace for less than $300 million. But they didn't. Murdoch called it "arrogance" that they didn't buy MySpace, and perhaps now they're paying the price.

Was that a mistake? Are Google executives feeling the burn on that so bad that they're willing to pay ten times the price to get Facebook? Self-proclaimed MySpace founder Brad Greenspan says MySpace is worth $20 billion - so maybe, just maybe Facebook is a good investment, even at that price.

But is the fickleness of post-adolescents really worth the risk? There are a lot of questions, and I think most of them point to a negative on the Google Facebook acquisition rumor. But I've been shocked before -- like yesterday.