To most users, the omnipresent online service Facebook is a useful tool for communicating with friends, peeking and prying at the semipublic identity of others, and most important, putting off important term papers for hours at a time. For eager advertisers, however, the site that’s all too often a huge waste of time for students is a big, lucrative and rapidly expanding market.
In a deal finalized last Wednesday, software giant Microsoft “”friended”” Facebook, purchasing a $240 million dollar stake in the social networking firm, and cementing itself as the winner of a silicon-valley investment battle as protracted as any online poke war. Microsoft’s offer beat out its closest competitors Google and Yahoo, buying the company the right to sell banner ads on the website targeted at users outside the United States. That may not sound like much, but with an unusually high 60 percent of Facebook users located outside the U.S., it gives Bill’s boys access to a significant number of eyeballs around the globe.
Of course, this isn’t the first big social network deal – there has been so much hype and hyperbole over the networking phenomenon that new sites allowing users to publish profiles seem to be sprouting everywhere on the web.ÿ In 2005, Australian media magnate Rupert Murdoch paid $580 million to acquire Facebook’s annoying cousin, Myspace. But that price is a pittance compared to last week’s big buy. Although Microsoft won the rights to place some advertisements, which has the potential to pay off in the future, they only acquired a tiny 1.6 percent share of Facebook in exchange for their cash. That means Microsoft paid almost 26 times the price per percent of ownership that Murdoch did for Myspace. It also gives the Internet upstart an utterly astonishing mythical value of some 15 billion dollars. That’s 100 times the site’s annual revenue, making Facebook the fifth most valuable site on the web. A college student addicted to the mini-feed might put an equivalently astronomical value on the company, but at first glance, it appears to be the sort of crazy overvaluation unseen on the internet since the dot-com bubble a decade ago.
Although it
Microsoft paid $250 per user for access to broke, bored college students pretending to be virtual zombies biting each other. Has the Internet gone insane again?
may seem like everyone and their mother (and a few other people with the same name) have Facebook profiles, the site only has about 50 million registered users, though it hopes to grow to include 60 million by the end of the year. That implies that at best, Microsoft paid $250 per user for access to broke, bored college students pretending to be virtual zombies biting each other. Has the internet gone insane again? Not quite.
Business and tech commentators have written off the massive deal as a ploy by Microsoft to grab whatever share of the internet ad market it can wrench from the hands of Google, its biggest online rival. But college students everywhere are intimately familiar with the source of the Facebook’s vaunted value. We’re constantly admonished to lock down Facebook privacy settings from prying eyes, untag last weekend’s embarrassing photos, and sanitize the quotes and interests in our online profiles, for fear that figures of authority will catch a glimpse of the sordid digital traces of our corporeal lives.
Students may be most concerned about moms and employers, but advertisers hope to grab those glimpses, too. Every interest, application, and wall post on Facebook is a valuable data point for advertisers – and every time you click “”OK”” to give a singing flowerpot or a Chomsky-quote-of-the-day access to your profile, more and more of your identity (be it real or slightly exaggerated) is exposed to somebody who wants to sell you something. As fun as it is to spend time on Facebook, there is a trade-off between the service’s utility as a communications tool and the amount of information one chooses to divulge.
Google searches work similarly, and more directly, allowing advertisements to be targeted very specifically to individual users. And in the same way, an individual’s internet outline can be deduced from the ads that cluster around his online identity. But Google has famously promised to protect its massive dumps of user data. The future of your Facebook profile is decidedly shadier. Although last week’s deal is a big win for Facebook and its employees, it’s a reminder for Facebook users everywhere of just how valuable your virtual identity can be – and how important it is to protect it.
Connor Mendehall is a sophomore majoring in economics and international studies and the opinions editor for the Arizona Daily Wildcat. He can be reached at letters@wildcat.arizona.edu.
