Interest in the not-even four year-old social networking site Facebook is reaching new heights, as the Wall Street Journal reports Redmond software giant Microsoft has entered into talks to acquire a minority share of the company, and New York State attorney general Andrew Cuomo subpoenas documents from the company as it investigates allegations of obscene content and sex predators on the popular site.
First reported by the Wall Street Journal, Microsoft is apparently in talks with Facebook to acquire a minority stake in the company. Microsoft’s pitch apparently places a $10 billion value on the company—which is a pretty astonishing figure for a company founded three and a half years ago by a Harvard undergraduate. Microsoft is looking to purchase up to 5 percent of the company, which would equate to a cash outlay in the range of $300 to $500 million.
Microsoft’s interest in Facebook may be to give its own social networking efforts a shot in the arm. Despite Microsoft’s domination of the personal computer operating system market, its efforts to introduce social networking (anyone remember Wallop?) and similar concepts to Windows Live services have not met with widespread enthusiasm. However, Microsoft undoubtedly has more commercial motivations as well: Facebook has rapidly become one of the Internet’s most-trafficked sites, and visitors to the site tend to stay there for a long while, loading many pages and using multiple site features. Microsoft would love to tap that audience for its growing online advertising efforts—and buying a stake in the company might be one way to guarantee its ad services get preferential treatment.
Of course, the 800-pound gorilla of the online advertising industry remains Google…and that company is also rumored to be in talks with Facebook.
At the same time, Facebook is also facing scrutiny from New York state attorney general Andrew Cuomo over complaints that Facebook’s claims of providing a Web site safe for minors do not match up with reality. The attorney general has just subpoenaed company documents as his office launches an investigation into complaints of obscene material and pornographic content on the site, as well as sexual predators using the service. Posing as underage users, investigators from the attorney general’s office say they were repeatedly solicited by adult sexual predators on Facebook, and could easily access pornographic content. The investigators also found Facebook slow to respond to complaints, and in many cases did not respond at all.
"My office is concerned that Facebook’s promise of a safe website is not consistent with its performance in policing its site and responding to complaints," Cuomo said. "Parents have a right to know what their children will encounter on a website that is aggressively marketed as safe."
