Feeds

Is Facebook worth more than Google?

$1 trillion valuation, ahoy

Build a business case: developing custom apps

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.

Boost IT visibility and business value

More from The Register

next story
6 Obvious Reasons Why Facebook Will Ban This Article (Thank God)
Clampdown on clickbait ... and El Reg is OK with this
No, thank you. I will not code for the Caliphate
Some assignments, even the Bongster decline must
Fast And Furious 6 cammer thrown in slammer for nearly three years
Man jailed for dodgy cinema recording of Hollywood movie
Caught red-handed: UK cops, PCSOs, specials behaving badly… on social media
No Mr Fuzz, don't ask a crime victim to be your pal on Facebook
Barnes & Noble: Swallow a Samsung Nook tablet, please ... pretty please
Novelslab finally on sale with ($199 - $20) price tag
Ballmer leaves Microsoft board to spend more time with his b-balls
From Clippy to Clippers: Hi, I see you're running an NBA team now ...
Video of US journalist 'beheading' pulled from social media
Yanked footage featured British-accented attacker and US journo James Foley
Assange™: Hey world, I'M STILL HERE, ignore that Snowden guy
Press conference: ME ME ME ME ME ME ME (cont'd pg 94)
Call of Duty daddy considers launching own movie studio
Activision Blizzard might like quality control of a CoD film
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
5 things you didn’t know about cloud backup
IT departments are embracing cloud backup, but there’s a lot you need to know before choosing a service provider. Learn all the critical things you need to know.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?