A ROAD WELL-TRAVELLED
The Wall Street Journal tells a cautionary tale around the reported discussions of Facebook potentially negotiating a 5% investment stake from either Microsoft or Google, at a valuation upwards of $10 billion.
It compares the potential Facebook transaction with the acquisition of Geocities in the mid 1990s by Yahoo! for $4.7 billion.
Even though the Geocities of 1994 may be portrayed as an early version of the Facebook of today, the two situations may be apples and oranges. Geocities was acquired in whole by Yahoo!, whereas Facebook is reportedly contemplating a minority investment by a major incumbent on it's way to a presumably successful IPO.
To me the potential investment by Microsoft is more like a similar investment in 1995 by Microsoft in UUNET, a leading ISP, before it's successful IPO later that year. The minority investment, along with an agreement for UUNET to help build out the dial-up network for Microsoft's budding MSN service, helped UUNET become the leading ISP in the U.S. over the next few years.
By way of background, I was closely involved with the Geocities, UUNET and Yahoo! IPOs as the lead equity research analyst, and covered them all after their IPOs as a research analyst.
The Wall Street Journal does a good job characterizing Facebook founder Mark Zuckberg's ambition in all this:
"Mr. Zuckerberg isn't gunning for just wealth. He's gunning for wealth and legacy"
In that context, the steps Facebook may currently be taking in seeking a minority investment en route to a future IPO, is a path that has good precedent in internet history.
Wasn't there an attempt at this in the 1990's that failed? Rather than target adds with voice recognition, the user had to put up with standard talking messages for about 20 seconds every minute or so that interrupted the call.
OK, that was just disruptive and doomed to fail. You are questioning whether screen based ads based on voice recognition would, at least not a priori, be rejected by the user. I think it is the trust issue you mention. One would have to know that the user's records were indeed private and not stored. What are the chances of that in reality?
"We've also gotten used to the notion that our wired and wireless calls are electronically monitored by national security services, not just more aggressively by the current US administration, but for decades. And we've accepted this tacitly or otherwise, that it's for the "good of society" as a whole."
Contrary to your implied assertion that governments are already monitoring calls, and that we have accepted that, this is not strictly true. Earlier attempts have been shot down, and the blanket attempts to monitor calls by the present administration using major carriers like AT&T are running afoul of the constitution. However I will grant you that while the government may not open mail or interfere with voice calls w/o a warrant, we do let Google have this privilege to make our email free. Maybe the USPO should offer the same service ;-) [pay for privacy, else let them slip in adverts after scanning the text].
As long as the service is voluntary and I retain options to communicate privately with paid services, then I don't see the problem. Where voice recognition would be useful on a GPhone is the ability to get addresses and businesses entered on demand and displayed on a map.
Posted by: Alex Tolley | Monday, September 24, 2007 at 03:42 PM