• Wired, Thursday, October 4, 2007 11:45 AM

Microsoft CEO Steve Ballmer, whose company powers advertising for Facebook, told the Times Online (link: http://business.timesonline.co.uk/tol/business/industry_sectors/technology/article2573297.ece ) that the social networking site and media darling ran a serious risk of becoming a passing fad. Is that any way to treat a business partner? Maybe Ballmer's comments had something to do with the fact that Facebook shot down Microsoft's advances to offer search on the site, too.

However, he could be right. The young company could befall a number of unfortunate fates if it fails to play its hand correctly in the near future. The magazine offers three potential causes of such a death, starting with user exodus, Facebook's most serious concern. Web users are a fickle bunch; despite a host of great bells and whistles, if something else comes along, watch how quickly its users defect. (Just ask Friendster.)

Timing is everything, and Facebook had great timing. What it doesn't have is a great business model. It's moneymaking scheme is "murky at best," the rate card is "pricey" and its revenue stream is "questionable." Lastly, the report warns that the investment bubble may soon burst, which means that now might be a good time to get out.

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