@Web2.0: Steve Ballmer Wants To Buy Your Company
Alberto Escarlate, the CTO-turned-reporter, sends us these dispatches from Microsoft CEO Steve Ballmer's Web 2.0 Q&A session with John Battelle: — How are the Facebook negotiations coming along? — "Mark Zuckerberg says it goes pretty well.
Context & Ripple Effects
Steve Ballmer takes the Web 2.0 stage with John Battelle just two weeks after Scoble argued that Ballmer still doesn't understand social networking — so this Q&A reads as his public answer to exactly that critique.
The substance behind the headline is concrete: Ballmer commits on stage to acquiring roughly 20 companies a year for five years, each between $50 million and $1 billion, while also demoing Popfly, a Silverlight-based mashup tool aimed at non-coders. On Facebook, the only word out of the session is secondhand — Alberto Escarlate relays that Zuckerberg says the Microsoft talks 'go pretty well' — which remains unconfirmed.
First-order effects
- Microsoft's stated appetite for 20 deals a year in the $50M–$1B band immediately puts every mid-sized Web 2.0 startup into play as a target, and puts pressure on the Facebook negotiation that Zuckerberg himself describes as progressing well.
- Yahoo, Microsoft and AOL are already bolting social networking features onto their webmail services in direct response to Facebook's growth encroaching on traditional email turf.
Second-order effects
- A public five-year, 20-per-year acquisition quota forces Google and Yahoo to defend their own pipelines — either matching the deal cadence or losing founders who now have a standing, priced exit.
- If the Flickr-support hint for Windows Live Photo Gallery materializes, Microsoft's consumer properties start absorbing third-party social services rather than competing with them outright.
Third-order effects
- The pattern points toward Web 2.0 consolidating around a few big-platform buyers: independent social startups increasingly price themselves against a known acquirer schedule rather than against advertising revenue alone.
- Email providers conceding that social networks own the social graph signals a structural shift in how portal companies compete — buy the network rather than rebuild one inside mail.
The trend: Large portals are shifting from building social features in-house to acquiring them on a scheduled cadence, with Ballmer's five-year, 20-companies-a-year pledge making Microsoft's version explicit.