Facebook Flirts With Yahoo
The Wall Street Journal (subscription required), Thursday, September 21, 2006 11:30 AM
Over the past year, social-networking site Facebook has held talks with Yahoo, Microsoft and Viacom over a possible takeover. Now, the start-up is again holding serious talks with Yahoo about selling for approximately $1 billion. Ever since News Corp. scooped up MySpace parent Intermix for $650 million, the pursuit of the promise of sticky traffic and assessing the large numbers of users at social networks has become priority one for many large Internet companies. The social networks know that the Viacoms and Yahoos of the world won't be getting an established network for as cheap as News Corp. bought MySpace. The danger of buying a social network is two-fold: One, the fickle nature of young users, who also happen to be the most coveted marketing demographic. What happens when MySpace is no longer cool? The other is the inability to control the content they create. Advertisers don't like that. At the moment, the first problem isn't one for Facebook. Pursuers are chasing the social network with wallets wide open. But that doesn't necessarily mean that Facebook will sell. People close to the company say company executives have considered following Google's example, but that would appear to be unwise, as Facebook doesn't have a world-beating technology to embrace. A $1 billion acquisition by Yahoo would be about half what the company was looking for in the past, according to previous reports. It's also unclear how a Yahoo acquisition would affect Facebook's recent ad partnership with MSN, a Yahoo rival--although Facebook told Yahoo that the ad deal did not preclude further acquisition talks.
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