Microsoft fiddles while Facebook burns

Say what you will about Valleywag (just don’t get Mike Arrington started) but Owen Thomas is a pretty smart guy, and I think he makes a good point amidst all the sturm und drang about Facebook and its market value, and how eBay’s $1.4-billion Skype-related writedown could affect the perception of that value (for more on that, just see this Techmeme thread or the Times Online blog).

It’s true that eBay’s writedown says a lot about the risks of paying bubblicious prices for things, and a $10-billion valuation for Facebook has certainly got more than a whiff of bubble about it. At the same time, however, Owen points out that there are just as many risks in not buying things. eBay is a great example of that too, having tried and failed to buy PayPal early on. And Yahoo has a boatload of missed opportunities, including Google and Facebook.

As for Microsoft’s hyperactive basketball-coach CEO, Steve Ballmer, his remarks to the Times about Facebook being a “fad” are just as likely to be an exercise in talking down the value of something before you buy a chunk as they are a thoughtful commentary on the company’s actual value. Or it’s possible that he really doesn’t get it.

In the end, I think Kara Swisher at All Things D probably has the right read on the situation: Facebook is likely to take some money, at a handsome valuation, but remain independent (unless $10-billion gets dropped off at Mark Zuckerberg’s flat, of course). If nothing else, MySpace shows the downside of being acquired too early.

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About mathewi

I'm the chief digital writer at the Columbia Journalism Review in New York, and a former writer for Fortune magazine and the Globe and Mail newspaper.

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