Life or death for Facebook
There’s an interesting battle brewing that may decide the fate of Facebook, the hugely popular social networking site. The country network of which I’m a member, South Africa, has tripled in size to 300 000 in just three months. I didn’t know there were that many internet connections over here.
However, there’s a dark cloud on the horizon. A very dark cloud. Microsoft is, according to the Wall Street Journal, in talks to buy a stake in the startup:
Microsoft in recent weeks approached Facebook with proposals to invest in the startup that could value the fast-growing site at $10 billion or higher, said people familiar with the matter. If those talks bear fruit, Microsoft could purchase a stake of up to 5% in the closely held startup, at a cost in the range of $300 million to $500 million, the people said.
But Microsoft must first outgun Google, which has also expressed strong interest in a Facebook stake, according to people familiar with the matter.
Microsoft’s Passport signon technology (now rebranded as Live ID) has proved to be wide open to abuse, and not only by external miscreants. When Microsoft bought Hotmail almost ten years ago, the webmail pioneer turned into a sluggish performer and a hotbed of spam. As this page documents, Microsoft itself had for years been both negligent and willfully complicit in some of the abuse. On one occasion it changed, without notification, all users’ preferences to share information with third parties, for example. On another, it tried to claim copyright on everything sent via Hotmail. It certainly has not been particularly respectful of users’ privacy, and has burned its trust relationship with its more savvy customers.
I’m sure Microsoft has tightened up its privacy policies by now. It’s appointed a Chief Privacy Officer and its PR machine makes all the right defensive noises. However, a 3 500 word policy can hide many secrets. My reading of its copyright notice suggests that it still claims an exceptionally broad licence to copy, use and sublicence anything you post on any Microsoft service, even if it is intended only for a private community.
So I vowed never to use any Microsoft-owned online service — MSN Messenger, Windows Live, Hotmail — ever again. Publications that required Passport Network registration were simply dropped from my reading list.
Facebook is already over-cluttered with applications. Some are useful, some cool, some annoying, and some just downright offensive. I don’t mean in the prurient sense; I mean in the spam hotbed sense. I usually decline to install them, but I accepted a fun one involving beer just yesterday. Contrary to explicit instructions not to, it invited a random selection of friends, some of which I really didn’t want invited. This kind of spamware can kill Facebook.
But not as quickly as Microsoft can. If Google buys Facebook, I’ll live with it. The Googleplex 0wnz me already, and I’m not even a heavy user of its services. However, it has yet to show the kind of negligence or nefarious activity that will compromise my trust. For now, the convenience of its online tools outweigh the very real privacy risks. But if Microsoft buys Facebook, I’m outta there like a shot. The Hotmail fiasco alone was enough for me to never trust Microsoft with private information of any sort again. Through negligence, incompetence and deliberate action, Microsoft has abused the trust of users too often in the past. Here’s hoping Facebook doesn’t become the latest victim.
Update: In good Facebook tradition, I’ve created a group: If Facebook sells to Microsoft, we’re leaving.
Good post with lots of meat on the privacy issue. Unfortunately, I agree that Microsoft will stampede over privacy issues if it gets its paws on Facebook.
My post focuses on the business perspective, which supports your concern in a kind of inverted if indirect fashion:
www.dotcomstrategist.com.
danka,
chet
I think you nailed it. What Microsoft wants is “a cyborg implant attached to consumers wherever and whenever they go online.”
Just to be Devil’s Advocate, Microsoft is only looking to buy 5%. I don’t know if that is enough to give it the ability to overrun Facebook. Another question is whether the majority of Facebook’s users are going to care about Microsoft’s involvement and the question then becomes whether it makes a difference that many of your contacts will stay behind?
The next question is which social network is the next one to go to? Google’s Orkut could become the next big thing once Google opens up more in November. There is also Plaxo’s Pulse and even Virb? Or is the social network site so last year?
True, it’s only five percent. But it will be an important five percent, especially if it involves a Microsoft Passport. Microsoft is also in search of long-term revenue streams of any kind. This isn’t a problem in itself (in fact, not trying to make money out of it would be a problem), but missteps are most often made out of desperation, and I suspect Microsoft may be getting a little desperate.
True, I’ll leave contacts behind. But unless I’m one of only a few, I think you’ll find that people can move to a different online hangout extremely quickly. I haven’t done any analysis, but both MySpace and LinkedIn have suffered greatly at the hands of Facebook, I suspect.
So yes, I guess Orkut it will have to be. Unless, of course, Google buys Facebook first. Which it might do just to spite Microsoft.
Are social networks so last year? I don’t think so. Only the hype will fade. Their use will just become unremarkable but more mature with time.
Ivo
I have been doing a little reading this afternoon and it looks like Orkut may well be the place to be in the near future. Have you come across Socialstream? It is a promising project set up to enhance Orkut (I posted a link to a demo video on the Facebook group you set up and on pauljacobson.tumblr.com) and while there are some Facebook-like features, it looks like Orkut is going to be a very exciting place to be pretty darn soon.
Could very well be. The Socialstream interface looks pretty snazzy.
This is the link: Socialstream demo
Hey Ivo,
I agree that Hotmail was horrible for the exact reasons you’ve stated. But have you ever read the Facebook Terms and Conditions; those you agreed to just before creating a profile? Facebook itself hasn’t ever been too concerned about your privacy, as it is at the moment, and I really doubt if a tiny 5% stake in it for Microsoft will have the result of Facebook starting to utilise LiveID.
Also have a look at this [1] - “…(Facebook) begun to publicly list members’ profiles on search engines such as Google and Yahoo!”
1 - http://www.news24.com/News24/Technology/News/0,,2-13-1443_2190392,00.html
Fair comment. I was indeed concerned about that when I joined. But like Google, Facebook hasn’t yet (as far as I know) abused my trust. Microsoft, on the other hand, has. But you’re right, technically it’s just a case of making a bad situation intolerable.
I blogged about that too. As I point out in that post, it’s not so much about privacy per se. Anything online is more or less public anyway. It’s about signing up with companies who are known to abuse that trust through negligence or worse.
I’m not sure how much influence 5% is going to buy…. I seriously doubt enough for Passport to be used on the site
Whoever gets to buy the share will inject some serious capital in to the Facebook business which will hopefully improve peak access times
I think Microsoft/Google are more interested in the eyeballs on the site than foisting their API’s on to it