Facebook in acquisition talks with Yahoo

21-09-2006

by Charlie Taylor

Social networking site Facebook is reported to be getting up close and personal with Yahoo in the hope of being acquired by the search engine giant.

According to a report in the Wall Street Journal, Facebook, which has previously held talks with Microsoft and Viacom over a possible takeover, is looking to sell itself for up to USD1 billion.

Founded in February 2004 by Harvard dropout Mark Zuckerberg, Facebook is the second most popular social networking site in the US, behind MySpace.com.

Since its initial launch the site has gained over 9 million users in schools and colleges in the US. According to comScore, Facebook is the seventh-most trafficked site on the web and is the number one photo-sharing site, with as many as 2.3 million photos uploaded daily. Moreover, the website is reputed to add 20,000 new accounts every day.

Social networking sites have become potential acquisition targets for a number of large companies due to their popularity among the coveted market of young internet users who use these sites to build communites and share information.

MySpace.com, which was acquried by Rupert Murdoch's NewsCorp in a USD580 million deal last summer, is now the fourth most popular website with global internet users, according to Alexa Internet, an Amazon subsidiary which monitors internet traffic. Moreover, MySpace recently signed a USD900 million search and advertising contract with Google.

Similar sites, like Bebo, which is the number one social networking website in Ireland and the second most popular in the UK, have also been quick to attract users and potential suitors. The site reportedly turned down a USD550 million offer recently in order to hold out for a better price.

Although Facebook has plenty of followers, it has also attracted controversy over the past few months. The site recently introduced new features that instantly notified users of their friends' activities on the network. However, the website found itself having to backtrack furiously when an estimated 600,000 members staged an online protest over the "News Feed" and "Mini-Feed" functions.

Following the backlash, Facebook reversed its decision and introduced new privacy controls that allowed users to block the features.