FACEBOOK: $6 BILLION? NAH.
Look. If you're Facebook, why on earth would you sell to Microsoft for $6 billion if you didn't sell to Yahoo for $1 Billion last year? You just wouldn't. You don't NEED anyone right now. Do you? Mark and his senior team has probably already been …
Context & Ripple Effects
The buyer speculation around Facebook has been building all spring: GigaOM asked in February whether the platform bet was smart or stupid, TechCrunch ran the buyer sweepstakes in May, and today InsideMicrosoft floats a $6 billion Microsoft approach. John Battelle's pushback is the counterpoint: Facebook already turned down Yahoo's $1 billion last year, so why sell at any price when it doesn't need anyone?
The rumor lands just after Facebook opened its platform to thousands of third-party applications — which is precisely the asset that makes a sale look unnecessary, and precisely what Microsoft, sketching out its own 'Cloud OS' developer strategy, would want. The wrinkle: TechMeme chatter insists Facebook's advertising isn't working, so the bull case rests on strategic scarcity rather than revenue.
First-order effects
- Mark Zuckerberg and his senior team face a straight leverage test: having refused Yahoo's $1 billion in 2006, entertaining even $6 billion would undercut the independence story their developer platform depends on.
- Microsoft, with Henry Blodget reporting Steve Ballmer is pushing hard for a big splash deal, must decide whether to raise the number or walk — a failed approach hands bragging rights back to Google in the developer land-grab.
Second-order effects
- If Facebook stays independent, its app platform competes head-on with Microsoft's Cloud OS opening for the same third-party developers, turning the two 'open platform' pitches into a bidding war for attention rather than an acquisition.
- Persistent claims that Facebook's ads underperform put pressure on the company to prove monetization fast — otherwise every future round gets priced on strategic fear, not revenue.
Third-order effects
- The pattern — decline a four-figure-multiple offer one year, hear six-figure talk the next — points to social networks being valued as strategic assets whose price is set by buyers' fear of missing out rather than by earnings.
- If the rumor cycle keeps inflating valuations faster than ad revenue can justify them, expect eventual correction pressure or a shift toward investment rounds instead of outright sales, with founders retaining control.
The trend: Web 2.0 deal-making is entering a phase where hot social platforms command prices driven by acquirers' strategic anxiety, making outright sales less likely than premium minority investments.