According to the BBC news website, Microsoft has recently invested $240m (£117m) in Facebook (article) in exchange for a 1.6% share of the company, totalling to a a value of $15bn (£7.3bn) on a firm that has only been in existence three and a half years.
I remember back in the day when big companies bought up popular buzz-filled websites Microsoft bought Hotmail, and when Yahoo! bought upcoming, when Google bought out Youtube — although this hasn’t happened with Facebook, it does raise questions about whether businesses are buying sites for buzz, branding, or on nothing but hot air?
Thinking about this sale brings memories back of the web bubble explosion of 1999-2000/2001. Of course back then companies and venture capitalists bought up sites based purely on buzz. Many of the companies bought websites that had no sales whatsoever.
Many believe that the web 2.0/3.0 phenomenon (which may, or may not be a marketing gimmick) is partially responsible for the new surge in demand for popular, high traffic websites.
Regardless of the reason, the BBC website gives 15 reasons why Microsoft might believe Facebook is worth $15bn.