• Fortune (via CNNMoney.com), Friday, September 28, 2007 11:11 AM

Facebook CEO Mark Zuckerberg's trip to Seattle earlier this week to meet with Microsoft execs lends credence to the reports that Microsoft is contemplating a major investment in the fast-growing social network. Zuckerberg is holding out for a valuation of $15 billion, either from Microsoft or other potential investors possibly including Google (Charts, Fortune 500).

Facebook is the closest thing to a next-generation Internet, one structured not around Web sites but people. In the Facebook topology, every data source or service is defined by who else is using it. The company has, in a crude way, solved the critical problem of Internet identity. Each member's profile is tantamount to their personal Web site.

This matters in business terms because the Internet is rapidly moving toward a world in which advertisers are able to target their messages to those most likely to be responsive. While this is often painted as an invasion of privacy, in fact it is a service. If these future systems work the way the ad industry expects them to, the ads we see will convey information we want. If software algorithms can help marketers identify what sorts of goods and services we are most likely to buy, it is a benefit, not an intrusion.

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