Google enters Facebook bidding war. Will these huge investments lead to a Dot-Com Crash?

 In Internet

Last month Wall Street Journal reporting that Microsoft was apparantly trying to buy 5% of Facebook for $300 – $500 million. Today the NY Post is reporting that Google is trying beat Microsoft to the punch trying to bid for 5 – 10% of Facebook Inc. It is expected that the deal will be announced within the next 48 hours and Facebook’s investors are looking for a pre-money valuation of $10 billion-$15 billion in any deal. On the high side, that means Microsoft or Google would have to come up with $1.5 billion for a 10 percent stake or $750 million for a 5 percent piece.

The main reason for both Google and Microsoft wanting a stake in Facebook is to ensure they secure the advertising deal for the site. While I think it is great that the Social Boom is making so many people rich my main concern is the fact that everything relies on Advertising to make a profit. Now this advertising maybe more targetted than the likes of TV etc but more and more people are using browsers such as Firefox (Sept 06 Firefox useage was 27.3%  Sept 07 was  35.4%) with many of these users chosing to install extentions such as Adblock Plus (300,000 new users a month ). Using Firefox with Adblock Plus almost completely eliminates advertising, infact the only adverts I ever see are the Sponsored Links in Google. As the popularity of Firefox/Adblock increases then surely advertising revenue is going to be severly reduced? Even worse if these become mainstream will there be a Dot Com style crash?

James
I am the director of Dolphin Promotions, a full service web design and marketing company based in Blackpool, UK.
Recommended Posts
Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Start typing and press Enter to search