News item: Microsoft take a stake in Facebook. Microsoft's rumoured investment — the companies aren't talking — would value the social networking site at $10-billion US. (Or, come to think of it, $10-billion Canadian … hey, I'm takin' the loonie out for a walk while I can! But I digress…)
Reaction: From David Bradshaw, principal analyst at UK-based consultancy Ovum:
We don't normally take rumours seriously, but there's so much smoke here that there has to be some fire. And at up to $10bn, that could be a very large fire! Indeed, it is such a large amount that it makes me suspect that we're in the run-up to another bubble in internet company values.
There are some problems with Facebook, for instance the current legal action between the founder and his former room-mates over the alleged theft of intellectual property, the increasing concerns over protecting children against 'grooming' by paedophiles (though Myspace with its younger audience seems more at risk here), and the increasing hostility in corporations to employees using social networking in work time – to the extent that some are now blocking access. Longer term, we believe that social networking sites have to evolve further. Users need much better privacy controls, for example to protect against identity theft and stalking.
However, it seems that social networking via the web is here to stay. Web 2.0 is a widely hyped term, but if it means anything it is greater collaboration between users mediated by the web. Social networking is one element of this but only one – but other sites are more centred on collaboration. Indeed, two of the largest successes of Web 1.0 – Amazon and EBay – were successful because they mediated collaboration between buyers and sellers.
It's therefore my view that Facebook is no more than a step along the way and that there's something further to come. Maybe we need bubble 2.0 to burst before we can get to that – but let's hope not.”