Feeds

Is Facebook worth more than Google?

$1 trillion valuation, ahoy

Secure remote control for conventional and virtual desktops

Open...and Shut We've certainly entered the silly season of Silicon Valley tech valuations, but one company strikes me as not richly valued enough: Facebook. You can argue about the company's privacy policies, its data hoarding policies, its choice of that ugly blue but one thing seems beyond doubt: Facebook is worth at least as much as Google. And probably more.

How can it not be?

As web traffic soars, driven increasingly by mobile, Facebook is gaining disproportionately to its peers, including Google. Facebook is the first website to top one trillion page views per month, leading some to speculate that Facebook could be the first company valued at over $1tb.

That number may be high, but Facebook's current valuation of roughly $75bn is almost certainly too low. Google is currently valued at roughly $175bn, essentially for its search/ad business. Facebook's own ad revenue doesn't yet approach Google's, but its potential is arguably bigger.

"Social", not algorithms, is the basis for all human commerce. Facebook owns social. That's got to be really, really big. At least as big as Google, and arguably bigger.

The irony is that Facebook has managed to make such a mint with an essentially open-source platform, in a way that the early open-source crowd could only dream about. As successful as JBoss, MySQL, and other open-source leaders were, their revenues were a rounding error in what Facebook stands to make from its own open-source platform play.

The difference, of course, is that Facebook (as well as Google and other savvy web giants) has a lock on user data. While the company courts developers to build on its platform, it's not reliant on open-source developers contributing to that core platform. It just needs users - currently 750 million of them - "Liking" and posting and clicking on ads to generate the $1bn-plus in sales that are driving it toward a massive IPO.

Facebook isn't in the clear just yet. Consumers have shown a high degree of fickleness toward social networks (Friendster, anyone? MySpace?), and could dump Facebook tomorrow, potentially even for Google's promising Google+ endeavor.

But this is unlikely. As BusinessWeek points out, Facebook hasn't made the same missteps that MySpace, for example, did. The company hasn't tried to be all things to all people. It has focused on building a solid, open platform that developers want to build on. Just like Microsoft before it.

This has translated into an ever greater share of the social pie going to Facebook.

Facebook v Myspace, source:comScore

More people, more pie: Facebook beats MySpace, according to comScore

As with Microsoft, it's telling that if you talk with a cross-section of venture capitalists, the majority will confirm that their portfolio companies are increasingly building on Facebook. Zynga was an early success story on Facebook, but there will be many others. Because that's where the users are. Or, rather, that's where users' social interactions are.

I once thought even a $10bn valuation for Facebook was overpriced. I was wrong.

Facebook has something that inflated valuations like GroupOn's don't have: it solves a fundamental human need (communication/interaction), while finding ways to monetize this need at the periphery. So long as the company doesn't become a breeding ground for bloated product mismanagement, it's going to be worth at least as much as Google. And probably a lot more. ®

Matt Asay is senior vice president of business development at Strobe, a startup that offers an open source framework for building mobile apps. He was formerly chief operating officer of Ubuntu commercial operation Canonical. With more than a decade spent in open source, Asay served as Alfresco's general manager for the Americas and vice president of business development, and he helped put Novell on its open source track. Asay is an emeritus board member of the Open Source Initiative (OSI). His column, Open...and Shut, appears twice times a week on The Register.

New hybrid storage solutions

More from The Register

next story
Apple Pay is a tidy payday for Apple with 0.15% cut, sources say
Cupertino slurps 15 cents from every $100 purchase
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Forget silly privacy worries - help biometrics firms make MILLIONS
Beancounter reckons dabs-scanning tech is the next big moneypit
Microsoft's Office Delve wants work to be more like being on Facebook
Office Graph, social features for Office 365 going public
Alibaba swings a large one with STONKING IPO legal bills
Chinese e-commerce beast searches for $21bn from investors
EMC has nothing to say on VMware sale plan
Rumour and counter-rumour swirl around Wall Street
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
Top 5 reasons to deploy VMware with Tegile
Data demand and the rise of virtualization is challenging IT teams to deliver storage performance, scalability and capacity that can keep up, while maximizing efficiency.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.