Microsoft’s investment in Facebook at a $15 billion valuation was one of the most buzzed about internet business deals in years given the unprecedented valuation assigned to Facebook shares. However most people are unaware that the deal took place after Mark Zuckerberg turned down an acquisition offer by Microsoft for more than the $15 billion valuation it invested at.

The full details of Microsoft’s negotiations are revealed in David Kirkpatrick’s exceptionally well written and must read book, “The Facebook Effect“. Here are a few of the most significant components of the conversation with Microsoft:

• The conversation between the two companies began around having Microsoft help with selling display advertising internationally.
• Oven Van Natta, then Chief Operating Officer of Facebook, pitted Microsoft against Google in locking in an international ad deal.
• Both Microsoft and Google were interested in acquiring the company, Microsoft being the more interested suitor, with Steve Ballmer even offering to buy the company outright for $15 billion. The potential acquisition would take place over many years, and the share purchase price would also most likely increase in value, meaning Microsoft would pay more than $15 billion if Facebook accepted.
• Facebook got the ability to manage (”and innovate on”) 15 percent of the domestic display ads
• Microsoft’s investment of $240 million in Facebook at a $15 billion valuation was alongside Li Ka-shing, who put in $60 million at the same valuation. The investment of Li was critical as to avoid Microsoft potentially having to write down a loss on its books from the investment.
• Microsoft received “1X nonparticipation liquidation preference” shares. As David Kirkpatrick explains, “if Facebook were ever sold outright, Microsoft would get back either its actual cash outlay of $240 million or 1.6 percent of the purchase price, whichever was larger.” However the company could not block further investments at lower valuations.
• Facebook was prohibited from taking money from Google as part of Microsoft’s investment.
• The investment round took place right before the crash at the advice of Peter Thiel, who told Mark Zuckerberg that “now would be a good time to raise money.”

In addition to sealing an ad sales deal with Facebook, the company also invested at the astonishing valuation of $15 billion. Additionally, the company helped accelerate the company’s growth through a lesser known deal: the ending of Facebook’s email being occasionally redirected to the spam bin on Hotmail. As David Kirkpatrick writes:

Hotmail was the largest source by far of such user referrals. But it interpreted many email invitations coming in from Facebook as spam—unwanted commercial messages. On days when Hotmail blocked the use of the contact importer, Facebook’s user growth dropped as much as 70 percent, says Moskovitz. So in the midst of the ad talks, uber-negotiator Van Natta, Moskovitz, and D’Angelo trooped up to Microsoft headquarters in Redmond, Washington, to iron out the conflict. “This was absolutely not something we could walk away from,” says Moskovitz. After a day or so of talks, Van Natta got Microsoft to stop interfering with the imports even though Facebook conceded almost nothing in return. Microsoft wanted the international ad deal.

One thing that’s clear was that in contrast to previous discussions (mostly with Yahoo!) in which Mark Zuckerberg had second thoughts about whether or not to sell the company, he was not interested in selling this time around. He had become steadfast in building what has become a brand used by close to 500 million people worldwide (and growing).

A little over a year ago, Mark Zuckerberg wrote a piece highlighting the importance of corporate transparency, especially within Facebook. Just over one year later, he is coming under scrutiny for what is essentially a lack of transparency. While there have been excessive and unnecessary attacks on Zuckerberg himself within some of the press, a lack of a response this time around will paint him as someone who is dictatorial.

Last year’s article by Zuckerberg ends with the following paragraph:

“History tells us that systems are most fairly governed when there is an open and transparent dialogue between the people who make decisions and those who are affected by them. We believe history will one day show that this principle holds true for companies as well, and we’re looking to moving in this direction with you.”

In his book, “The Facebook Effect“, David Kirkpatrick writes about a dialogue he had with Mark Zuckerberg, just two weeks after the company announced the results of the company’s vote on two new documents: the Facebook Priciples and the “Statement of Rights and Responsibilities”:

Zuckerberg was please when I talked to him two weeks after the results were announced. He planned more such votes in the future. “If we do something controversial, what this will really mean is that we’re accountable to our users,” he told me. “We now need to communicate with them clearly about it. I think that keeps us honest.”

Just weeks into the company’s latest privacy dilemma, Facebook is remaining relatively silent about making any impending changes to satisfy users. The company appears to continue supporting the “Instant Personalization” service despite tens of thousands of users voting against the product by opting out in addition to posting status messages describing how to opt out of the program (continuing through today).

Rather than making any official statement, Mark Zuckerberg (and company) decided to let the company’s VP of Public Policy, Elliot Schrage, engage in a less-than-transparent reader Q&A with the New York Times. While the company’s communication team is clearly doing what they can to try and quell the backlash, it requires a stronger statement from Mark Zuckerberg himself. No matter what the company’s intentions are moving forward, it’s pretty obvious that they should be more open about it with the users.

Mark Zuckerberg spent his 26th birthday doing something that may be looked back at as a significant milestone for the company: waiting out a Facebook privacy storm. In previous years, Mark Zuckerberg could have only wished for the privacy storms to pass over, as concessions were made as a result of each previous storm that passed through. This time though, an unlikely player may have just served as the victim in what has become a perfect media-fueled privacy storm: Google.

Google Takes The Fall

Just as the press was at the peak of its attack on Facebook for the company’s latest changes, Google has volunteered itself for becoming the face of technological privacy blunders. At the end of the week, the company admitted to collecting “payload data” from public WiFi networks through the company’s Street View cars. The company has now understandably come under attack for the move. It also couldn’t have been better timing for Mark Zuckerberg, who just the day before, had a quote from a soon-to-be-released book about Facebook published on the web:

Let me paint the two scenarios for you. They correspond to two companies in the Valley. It’s not completely this extreme, but they are on different sides of the spectrum. On the one hand you have Google, which primarily gets information by tracking stuff that’s going on. They call it crawling. They crawl the web and get information and bring it into their systems. They want to build maps, so they send around vans which literally go and take pictures of your home for their Street View system. And the way they collect and build profiles on people to do advertising is by tracking where you go on the Web, through cookies with DoubleClick and AdSense. That’s how they build a profile about what you’re interested in. Google is a great company, but you can see that taken to a logical extreme that’s a little scary.

Ironically, it was a direct attack on the exact program (Google Street View) that has become a source of privacy violations. It could not have been better timing. Mark Zuckerberg has essentially positioned Facebook as a better alternative to Google as the company doesn’t go about tracking people, instead they collect voluntarily shared data:

If you allow people to share what they want and give them good tools to control what they’re sharing, you can get even more information shared. [...] This is one of the most important problems for the next ten to twenty years. Given that the world is moving toward more sharing of information, making sure that it happens in a bottom-up way, with people inputting the information themselves and having control over how their information interacts with the system, as opposed to a centralized way, through it being tracked in some surveillance system.

The Lesser Of Two Evils

When contrasted with Google’s system, it’s appears to be a much better alternative. Despite some of the more complicated issues that Facebook is wrangling with (in trying to accelerate people’s willingness to share more information publicly), Facebook could actually come out as the victor, as it is perfectly contrasted to more aggressive (and questionable) tactics used by Google.

Honestly, it’s a dangerous game. Consumers should not be forced to choose between the lesser of two evils. However the media is only focused on what drives eyeballs and if the majority of consumers choose to view Facebook’s new privacy strategies as “last week’s news” (with the help of the media), the latest Facebook privacy storm may indeed come to pass.

In fact, some people are already convinced that this storm is going to pass over. They have ceded defeat on behalf of Facebook users and are ready to move on to the next story (Google is looking like a pretty good target). While I hope the press chooses to continue to force what is a much needed conversation surrounding the protection of users, Google may have just given Facebook their first opportunity ever to weather a privacy storm.

The evil Google icon was found via Merodeando.

There have been a bunch of rumors about Zynga leaving the Facebook Platform over the past week. The story has been watched closely by developers who are also feeling the tightening grip of Facebook, however no source has painted such a dramatic picture as Fox News. In an article this morning, Fox states, “Sources at Facebook described Zynga as a bad actor, which is putting profits before its users, and suggested that if the situation persisted it would be best if Zynga’s games left Facebook altogether.” Really?

Sources at Facebook suggested that Zynga leaves the Platform? That just doesn’t make sense. While Facebook has an immense amount of control over Zynga, I seriously doubt that the company would hope Zynga just goes away. The primary reason is that more than 24 million people come to Farmville alone, every single day. That’s approximately a tenth of the daily users on Facebook all together.

While I’m sure that there could be significant tension between the two companies, it sounds as though the source that Fox News used probably wasn’t that high up. Additionally, Fox News describes FarmVille as “a cartoonish simulation that melds ‘Leave it to Beaver’ and ‘Green Acres’”. I have no idea how they came up with that description!

I’ve never referenced Fox News as a legitimate news source however it’s pretty entertaining to see the company get in on the Zynga rumor mill action.

Respected British football manager Bill Shankly once famously said, "Some people believe football is a matter of life and death...it is much, much more important than that." While growing up in Taiwan during my childhood, I learned firsthand what Shankly meant.

Football, also known as soccer in some countries, is not exactly a national sport in Taiwan. Come to think of it, I can't remember the last time the national team even came close to qualifying for the World Cup. But when the tournament came around, everything—and I mean everything—stopped. The World Cup was the one event that brought everyone—my family, friends, country and the world—together. For a few moments at least, the world seemed smaller and more connected.

In a few short weeks, people from all 32 competing countries and the rest of world will come together for the 2010 World Cup unfolding in South Africa, both on the field and through Facebook. To make it easier for you to be part of the action with your friends and the world, we're launching Facebook's Goal! Leaderboard today on the Sports on Facebook Page.

We chose one of our preferred developers, Involver, to build this application, and they've created an engaging, globally accessible application that is designed to ignite and stoke global football passions in preparation for the June 11 kick off. It is available initially in English, French, Spanish, German, Italian and Portuguese.



This leaderboard complements the hundreds of authentic team, player, brand and media voices that are sharing World Cup dreams and drama on millions of people's Facebook home pages. People's football passion will be shared, liked, commented upon and amplified billions and billions of times over. In fact, one could say that the 2010 World Cup tournament marks the first time in history that the event will be truly experienced and celebrated through the eyes of friends.

Through the Goal! Leaderboard, fans all over the world can:

• Like their favorite teams


• Publish a News Feed story broadcasting their support


• Recommend their team to their friends


• Invite their friends who aren't on Facebook to support their team

To help you and your friends get in the competitive spirit, Facebook will be tracking and ranking teams based on a "Passion Index"—a measure of a team's total number of "Likes" divided by the internet population of the country it represents.

The leaderboard will be available via the Goal! tab on the Sports on Facebook Page. Connect with your favorite team, show your support and share your passion with your friends. And while you're at it, help us bring your friends and the whole world together.


Alex Wu, who runs the Sports on Facebook Page, is excited about experiencing the World Cup live in South Africa with one of his best friends—his little sister.