Zuckerberg Won’t Be Microsoft’s Monkey Boy

Selling Facebook to Microsoft would not be the best way to fulfill its mission of enabling people to connect with one another, said Mark Zuckerberg, founder and CEO of the social network.

During the D6: All Things Digital conference in Carlsbad, Calif., Zuckerberg was asked whether he would consider selling if Microsoft CEO Steve Ballmer offered US$15 billion for the network. That is roughly the price that the entire network would be valued at based on the $240 million Microsoft paid last year for an ownership stake of less than 2 percent.

The company’s goal is to execute on building better tools, technology and platforms for sharing information, Zuckerberg commented, and selling to Microsoft does not necessarily advance that mission.

‘A Good Partnership’

Reports that Microsoft is interested in buying all of Facebook resurfaced in recent weeks after the software maker’s unsolicited bid to acquire Web portal Yahoo unraveled. Asked whether Facebook’s investors could sell the firm without his approval, Zuckerberg said, “I don’t think so.”

During the session, Zuckerberg and Chief Operating Officer Sheryl Sandberg — a former Google executive recruited to help bring some experience to the Facebook front office — also touched on the network’s plans to leverage its large user base for advertising opportunities and other changes in the works.

The deal with Microsoft has created “a good partnership,” Sandberg said. Zuckerberg, who founded Facebook while a student at Harvard, noted that he talks regularly with Google cofounders Larry Page and Sergey Brin.

Mistakes Were Made

The duo acknowledged that Facebook made a mistake by rolling out the ill-fated Beacon marketing service on the platform. The service, which met with howls of protest from users about privacy and Facebook scratched just weeks after it went live, automatically generated a note on a user’s profile when they shopped at a Web site or filled out an online review.

Still, the advertising opportunities remain rich, Sandberg added, citing the example of a Ben & Jerry’s campaign that involved the distribution of coupons for free ice cream cones. The company bought a quarter-million coupons and gave them away for people to share with friends and then another 250,000 cones. The site encouraged users to list their favorite flavors on their profile pages and to visit the company’s Web site. Within 24 hours, the campaign generated some 53 million impressions on Ben & Jerry’s marketing materials.

“Advertisers are interested in demand fulfillment, that question of how you capture people’s attention and engage them when they don’t know what they’re looking for,” she said. “The dream for advertisers is to let people engage with their products. That is the vision, and it’s a pretty Facebook-unique opportunity.”

Trial and Error

Figuring out how to drive revenue from social networks has proven a tough nut to crack. Google recently cited slower-than-expected growth in that sector — it delivers ads to MySpace under a long-term deal — and market research firm eMarketer recently lowered its forecast for ad revenue growth in the space.

eMarketer now expects U.S. social networks to bring in $1.4 billion in ad revenue this year, below the $1.6 billion it predicted just a few months ago, though even the new figure still represents 55 percent growth over 2007 levels. The firm also lowered its forecast for the next three years.

While some of the revision was due to a slowing U.S. economy, eMarketer Senior Analyst Debra Aho Williamson said the sector is still searching for the formula that works best to unlock the potential many see in the sites, where millions of consumers — especially young people — are spending an increasing amount of their time.

“It’s still being figured out by trial and error,” Williamson told the E-Commerce Times, citing the Beacon debacle as one example of a misstep that could set back efforts to grow marketing revenue. “Marketers know there has to be a way to tap into all these conversations and interactions, but no one has quite figured out the formula just yet.”

A Face-Lift

Users will see the platform changing over time, Zuckerberg said, with a main goal to encourage third-party developers to create applications that engage users more broadly and intuitively.

“If you look at the original version of the network, it focused on developers building in boxes that people added to their profiles,” he commented. Because of the sheer volume of those apps, that approach is becoming unwieldy. “We want to make sure developers are incentivized to make applications that engage users and that will spread throughout the system more.”

Questions about privacy also surfaced during the session, parts of which were broadcast on the conference Web site. Asked about the loss of privacy made possible by sites such as his, Zuckerberg said that people feel comfortable sharing as much information as they do because they can control who sees what they post. “People are constantly tweaking their privacy settings.”

Users have clearly not been kept away from social networks by privacy concerns, though the flap over Beacon shows that they want to retain control over what happens to their information, Forrester Research analyst Josh Bernoff told the E-Commerce Times.

“The networks need to give users the tools to control their own destinies on privacy,” he said. “Once marketers are comfortable that users are satisfied that their information is theirs to control, more possibilities will be opened up for advertising.”

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