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‘Wild’ Facebook valuations vindicated

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Real Business had this discussion in the office today, and opinions were mixed. Valuations ranged from a paltry $600m to an unrealistic sounding $15bn (the latter was my guess).

There are a few factors to consider. The previous largest amount paid for a website was in the late 90s, when Yahoo forked out $6bn for Broadcast.com. But that was in the crazy boom days, when people valued sites on finger-in-the-air expectations of how much they’d get back.

Now we’re clearer. And we understand that, while the technology underpinning the web is changing quickly, revenue streams are broadly the same (ie advertising and e-commerce).

Well lookie here: a report on Business Week about Microsoft’s $240m investment in Facebook, valued the website at, you guessed it, $15bn.

Smugness aside, it’s a sweet deal for both parties. Microsoft gets to build online advertising muscle, and Facebook gets a tech behemoth for a best buddy. But the big winner here is Rupert Murdoch: the deal makes his $580m purchase of (the even more popular) Myspace.com look like the sale of the century.

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