Rumor is that Microsoft is looking to close a deal to buy Facebook for the amazing sum of six billion dollars. Henry Blodget says that while he can’t confirm it, he has definitely heard that Steve Ballmer is desperately trying to make a big splash play to counter Google in the internet game. Considering that all we’ve been hearing of Ballmer recently is that his focus aas the new leader of Microsoft is in services, it would make sense to grab the most buzzworthy free agent on the web.
What could happen with Facebook? Unlike buying Yahoo, Facebook actually fits into Microsoft’s portfolio, since they don’t have a social network. What Microsoft does have is Windows Live Spaces, the most popular blogging service on the planet, and the two should complement each other. In fact, if an acquisition happens, the Facebook team should be combined with the Live Spaces team, and the two services should become one.
Live Spaces should become the blogging component of Facebook, while features of Facebook should become full-fledged services with those of Live Spaces, like the photo sharing. Soapbox could be integrated with Facebook for video sharing, Live Messenger has a ton of integration opportunities for messaging, pokes, notifications. Facebook applications could be ported as Live.com Gadgets and Sidebar Gadgets. A Windows Live Search box could top every Facebook page.
The more you think about it, the more you see how Facebook would make Windows Live work. I’d argue that Ballmer should be willing to go as high as ten billion, since Facebook can make their Google competitor reality. If Facebook makes Windows Live work, we’re talking maybe a billion dollars a quarter in revenue, more if they reach Yahoo levels. That six billion could be earned back real fast.