"Fad" or Feint? Microsoft's Ballmer on Facebook

Steve Ballmer, who has reportedly offered to pay $300 million to $500 million for a 5 percent stake in Facebook has warned that the social networking phenomenon risks becoming no more than a "fad" in an interview published today.

The Microsoft C.E.O., who has been known to hurl chairs around his office if he doesn't get what he wants, made the comments to The Times of London in Tuesday editions.

"I think these things [social networks] are going to have some legs, and yet there's a faddishness, a faddish nature about anything that basically appeals to younger people," Ballmer was quoted as saying in The Times.

(The Times, it should be noted, is owned by News Corp., which also happens to own the rival social networking site MySpace.com. As The Times itself notes, the research group Netratings said that Facebook surpassed My Space last week to become the most popular social network in Britain.)

Ballmer didn't stop by discounting Facebook as a fad. He went on to disparage Facebook's technology: "There can't be any more deep technology in Facebook than what dozens of people could write in a couple of years. That's for sure."

Why Ballmer would place a valuation of $10 billion on a "faddish" company with amateurish technology—let alone pony up half a billion dollars for a stake in the company—remains an open question.

One possibility is that Ballmer is being crazy like a fox—a known trait of his—and is signaling to Facebook's 24-year-old founder Mark Zuckerberg: "Hey guy, take it down a notch. You're not all that."

Ballmer also may be sore due to unconfirmed reports suggesting that Microsoft had been interested in buying a much larger stake in Facebook—possibly even the whole company outright—only to be rebuffed by Zuckerberg.

But Ballmer wasn't wholly negative on the social networking phenom. He told The Times that he saw value in Facebook's brand and its "network effects."

In sum, he may be telling Facebook, "Look, right now you're no more than a fad. Hook up with us, and we'll make you a legit."

If so, this type of negotiation-through-the-press represents a little bit of hardball on Ballmer's part. We'll now see if Zuckerberg is ready for the playoffs.

by Sam Gustin

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