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Will Facebook suit Yahoo?

Posted in Digital, Mel Varley, Latest reporters' blogs August 7th, 2007 by Melinda Varley

Search engine giant Yahoo! is constantly in the market for acquisitions and next on the agenda could be a social network, if the state of its current offering - 360 - is anything to go by.

If you take a look at past acquisitions, most of them make sense in the search engines business model.

Take for example its acquisition of Flickr. Yahoo!, being the first to do most things but not on the scale of which they could actually be successful, had its own photo site similar to Flickr.

However, Yahoo! Photos was only for Yahoo! users and therefore could never attract the high number of users in Europe that it could in the US. In order to turn the tool into a worldwide success it enlisted the help of Flickr and now the Yahoo! Photo site no longer exists.

Instead of improving their own service, perhaps marketing it a little better, Yahoo! gave up and instead bought another service that would do all the hard work, or in this case, already had done.

This is why a Facebook acquisition makes sense. Yahoo! has said previously, after attempting to purchase Facebook for $6 million last year, that the social networking site “suits its business model.”

However, I wonder if Yahoo! still feels the same now that the Facebook has landed itself in hot water with most of its advertisers.

More than six different advertisers have pulled their ads after finding them linked to pages such as the British National Party and the site’s founder Mark Zuckerberg faces court tomorrow (6 August) for allegedly stealing the Facebook idea from his Harvard mates.

So, is Facebook a good investment? The site, which has so far endured a phenomenal growth rate, has also  ran into a little too many teething problems considering it only went public last September.

The cracks are beginning to show. Success doesn’t last for ever, and Facebook is already being banned by companies for distracting workers, stifling its future growth rate. Will Facebook stand the test of time and come out on top of its growing list of problems or is now a better time for Yahoo! to consider other possible acquisitions?