Microsoft's Face in the Book

A rose's beauty is eventually extinguished once the flower is picked. In picking up Facebook and trying to engraft it onto the Office and Windows hardwood, Microsoft could easily destroy what makes Facebook so appealing, both to existing users and to Microsoft.

Facebook's allure for Microsoft:

• A rapidly growing number of users and expanding circles of relationships. Facebook claims 30 million active users. These aren't teens, but college students and business folks and people with common interests or hobbies. The demographics resonate well with Microsoft's emphasis on business software and services.
• Facebook's platform approach, which conceptually resonates well with Microsoft emphasis on building platforms. Facebook has the potential to become a kind of operating system in the clouds that developers extend and plug into.
• Commerce enablement. Facebook may not be the big ad platform many people expect it to be. Last week, digital marketing consultancy firm Reach Students revealed dismal success from four Facebook advertising campaigns: 0.04 percent click-through rate from 1.4 million ad impressions. Remember: Facebook started with schools. While advertising is uncertain (for now), the Facebook platform is poised to allow all kinds of third parties to plug in and make money selling their wares or enable Facebook users to buy and sell stuff.
• Established services with objectives similar to Windows Live. Microsoft could use Facebook to rapidly expand its messaging, collaboration and social networking capabilities. As I said a few months back, Microsoft has made clear that it's willing to buy what it can't build fast enough. Its priority is catching up with the Web platform and pushing past it.

Microsoft executives have got to be looking at Facebook, if for no other reason than expanding the existing advertising relationship. I won't speculate on an acquisition, but there is one important context to remember: Microsoft has just plunked down more than $6 billion for aQuantive and another $1 billion-plus for Xbox repairs. The bean counters in Redmond will want to make sure Microsoft doesn't pay too much and that it gets plenty of value for whatever company it acquires next.

Microsoft could have a hard time buying Facebook without making too many changes. Here's why:

• Windows Live Integration. Facebook's 30 million users are certainly impressive, but those numbers are still small to Microsoft, which claims 100 million to nearly 300 million unique Live users, depending on the service. Microsoft's temptation would be to open up its large Live user base to Facebook, forever changing the service's character.
• Software plus services, which is the antithesis of Facebook's services plus software approach. Facebook's service—which, granted, is built on software—is quickly becoming an operating system-like platform in the clouds. Microsoft's core focus is desktop and server software. The software plus services course dictates that, rather than build out from the Facebook service, Microsoft must pull computing and informational relevance back to the desktop.
• Microsoft uses its own technologies. If the software giant bought Facebook, there would be changeover to nearly or all Microsoft underlying technologies. Netcraft identifies facebook.com's server operating system as "unknown," which typically means Linux, and the Web server software as Apache. Microsoft would change the underlying server software, at the very least. These changes would eventually affect the broader platform and how or what developers built on it.
• Proxy for Office and Windows. Facebook's user base would tempt Microsoft executives to place integration hooks from the service to Office, Windows and the company's server software. Such changes would put Facebook in the position of being a major commerce platform for selling Microsoft software, because the service-to-software hooks would dictate that people use products like Office. Anything else would be something contrary to its corporate DNA.

I use Facebook, which I regard as a great service with even greater potential. Should Microsoft ever buy Facebook, I would probably stop using the service within a year following the acquisition. I want my Web services to be available anytime, anywhere and on anything. Microsoft would likely reshape Facebook in its own image, changing the service into something else. Could Microsoft operate a Facebook as a truly independent division and platform? I'm skeptical. Commenters, what do you think of a possible Facebook acquisition: Yes, no, maybe?

Related Posts:

• Ballmer is the New Gates, Microsoft Watch, July 10, 2007
• Which Comes First, Software or Services?, July 10, 2007
• Live Lives, But How Well?, Microsoft Watch, June 27, 2007
• One Redmond Way | Razorfish, Microsoft Watch, May 21, 2007
• Why Microsoft Wrote aQuantive a Big Check, Microsoft Watch, May 18, 2007
• Microsoft MIXes It Up, Microsoft Watch, April 30, 2007
• Who Pays for Software Plus Services?, Microsoft Watch, March 15, 2007
• Tell Me What?, Microsoft Watch, March 14, 2007
• Google Catfight About 30 Years in the Making, Microsoft Watch, March 6, 2007
• What Is Microsoft's Services Platform?, Microsoft Watch, March 1, 2007