There was lots of chatter this morning about the possibility that Microsoft is negotiating to buy Yahoo's search business. But the latest rumor is sure to set the internet ablaze with speculation--people are saying that after inking the deal with Yahoo, Microsoft will turn around and buy internet favorite Facebook.

"What a move this makes. Yahoo gets everyone off their back, Microsoft gets a credible position in search, and buys Facebook to compete with Google," Furrier.org writes. "The price about $45 billion."

Silicon Valley Rumor: Microsoft to Buy Yahoo Search and Then Facebook [Furrier.org]

We at my apartment (so me and Marissa) have heard that the invasion of employee privacy by Wall Street firms has taken a bold step forward: hacking into employee Facebook accounts. According to a sometimes reliable, sometimes not source, the human relations department at a certain investment bank has been using creative technology to get into the profiles of current (and prospective) minions, to monitor their off (and on) the clock activities. This is bull shit and I'll tell you why: it would be one thing, if you and those with the power to get you fired willingly entered into a Facebook friendship, thereby granting them full-access to see what's a-poppin' in your personal life whenever they pleased. But this means that someone who doesn't even have the bedside manner to ask "You wanna do this" first, or worse, someone whose online friendship you've formally said no thanks to, can see that you've added "Boiler Room" to your favorite movies (sheep) and changed your status from "Billy is working at Bear Stearns" to "Billy is getting a public citation for having relieved himself on the sidewalk in front of Bear Stearns which he wouldn't have had to do in the first place if those FUCKS hadn't fired him." Anyway, try and guess which firm we're talking about via Facebook message (thereby granting me access to see your profile for one week even if we're not friends) and I will respond shortly.

Because he’s a genius—or maybe just one of the few remaining people not seduced by the idea of a site that refuses to put a cap on the amount of useless crap "applications" it will offer, none of which does anything to better facilitate the stalking/slaying of potential prey—Steve Ballmer said that he regards individual social networks as a “fad,” seemingly implying that Microsoft will not be making a $300-500 million investment in Facebook (for a 5% stake that would place the company’s value at around $10 billion). (You have Christ, we have wishful thinking.)

“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 told Times Online. Though he acknowledged some vague potential value in Facebook’s 40 million users, he noted that “There can’t be any more deep technology in Facebook than what dozens of people could write in a couple of years,” a point that makes the valuation Zucks (claims not to be but probably) is seeking, for a site expected to achieve revenues of only $150 million this year, what’s the word? Insane. (Ridiculous. Dumb. Adidas shower shoes. Etc.)

Ballmer also, somewhat awesomely, added that sites like Geocities “had most of what Facebook has” years ago (and without the personification-of-a-smug-twat grin). He did not comment on why Mark Zuckerberg was seen in Seattle last week (a spotting that fueled speculation about a Microsoft investment). However, the tone of his voice seemed to hint at a combination of a. (“Bryan Adams with George Thorogood concert at the WaMu theater”) and e. (“Annual pilgrimage to Brandon Lee’s grave in Lake View Cemetery”).

Earlier: Cutting The FaceBook/Microsoft Deal Rumor Off At The Knees

Ballmer: Facebook risks being 'a fad' [Times Online]

By now you know the rumor that Bill Gates has lost his mind and is considering an investment of $300-500 million for a 5 percent stake in Facebook, which would value the social networking site at twice what Rupert Murdoch paid for Dow Jones. (Making trashtastic MySpace worth $11-12 billion, according to Lehman Brothers analyst Vijay Jayant.) The fact that ‘book CEO Mark Zuckerberg was spotted Tuesday in Seattle, according to ‘Fortune’ reporter/stalker David Kirkpatrick, gives weight to the rumor, and lowers the chances that it’s not all some horrible joke and/or plot by Steve Jobs to make Bill Gates bad.

But since we’re still holding out hope that Microsoft isn’t planning on parting ways with a truckload of money for a website filled with worthless plug-in applications and at which one user can “poke” or “tickle” another and then laugh to him or herself about it, we’re going to come up with a more plausible explanation for Zucks’s visit to Washington and stick with it. The continued existence of the Bill & Melinda Gates Foundation, and the disenfranchised who so desperately need its help, depends on this rumor being bull shit. So you tell us:

The real reason Mark Zuckerberg has been seen in Seattle is:

a. Tonight’s Bryan Adams with George Thorogood concert at the WaMu theater

b. For a naughty game of hooky with David Kirkpatrick, who writes that, having “gotten to know [Zuckerberg],” who is “driven by a conviction that what he is doing will make the world a better place” and “is a nicer person than Gates,” has come to the conclusion that “it may be…worth quite a few hundred million for any company to get into bed with Mark Zuckerberg.”

c. Adidas shower shoes.

d. Coffee date at flagship Starbucks with Kofi Annan to discuss how Facebook can get involved in the Arab-Israeli conflict.

e. Annual pilgrimage to Brandon Lee’s grave in Lake View Cemetery.

f. a. and b

g. a. and c.

h. a and d.

i. a and e.

j. b and c.

k. b. and d.

l. b. and e.

m. c and d.

n. all of the above

o. none of the above

Zuckerberg Sightings Fuel Deal Speculation [DealBook]
Facebook CEO visits Seattle, Microsoft schemes [Fortune]

In the UK, where employers haven't quite started mass firewalling facebook from corporate servers, a new study estimates that social networking productivity drainers like facebook can cost firms up to 130 million pounds a day, or over $260 million.

The study was conducted by employment law firm Peninsula and tracked 3,500 UK companies, estimating that 233 million hours are lost every month to social networking dalliances at work.

In other social networking news, those 300 facebook friends you have aren't really your friends. Despite the massive numbers of people using these sites (MySpace is still the most trafficked site on the internet (we think even including porn, which isn't usually accounted for)), studies are showing that an individual's number of close friends does not increase with rampant online social networking. A huge contact list on a social networking site belies your real social status - of being a huge loser.

We're still waiting for the study confirming that the number of times you have your shirt off in facebook pictures is inversely proportional to how often you get laid.

*Pictured - Otis may have never met Milo had he been sitting at his computer.

Facebook 'costs businesses dear' [BBC]

Britain's largest bank announced today that it will not be implementing a plan to make money by charging interest on graduate overdrafts, because Facebook.com asked it not to. HSBC caved after catching wind of a group on the social networking site called "Stop the Great HSBC Graduate Rip-off," whose 5,756 members requested that the financial institution *not* charge them interest, referred to the bank as a "spin machine," and encouraged friends and family to go elsewhere out of spite. (One member, Martin Deakins, posted on the group's wall: "YEAH see HSBC you cant just f**k us over as and when you feel like it." Another, Michael Dean Anderson, perhaps a mole sent by the banking giant, wrote: "You all really need to get over yourselves and just pay it back. Fucking freeloaders: hate 'em. Much love.")

The reversal marks a victory for grads who would sooner opt to have money versus not have money, and a new low for the bank (next, Goldman Sachs's GEO will slash fees from 2/20 to 0/10 to 0/0, under pressure from a group formed by a bunch of Stern kids pushing their luck). Some might also regard it as accomplishment for the Facebook family, though it disappoints us greatly to see something that was created soley for the purposes of stalking classmates and/or getting laid to be used for such constructive means. Stuff like this was never in Adidas flip-flop boy's business plan.

HSBC submits to online student protest [Times Online]
Can HSBC Really Be Just That Dumb? [myvestauk]

Zuckerberg (shocked): "You mean we have to monetize our user base in order to command a $50 billion asking price? A couple mil from selling icons of cuddling bears won't cut it?"

Upon this revelation, Facebook is working on a system that lets advertisers target ads based on profile content. Facebook swears this is just like Google reading your emails to target you with ads, which provide a constant source of amusement. Facebook plans to unleash the adspace invader in the fall.

We doubt the system will be able to tell if the information in your profile is a joke, or if you've actually read Voltaire, Clancy or Ferrell (but you quote them so you must be familiar with their work, no?).

If you found this story boring, the top two Reuters stories may ignite your interest...

Facebook devising new advertising system: report [Reuters]
Woman sets fire to ex-husband's penis [Reuters]
Boy in court for throwing sausage [Reuters]

Disney has officially lost its mind. The Immodest Mouse bought Club Penguin, a social networking site for the tween and pre-tween demo. As the name suggests, Club Penguin allows you to make your own penguin avatar and enter a virtual world where you can endure the brutal, constantly near-death existence of a penguin to the High School Musical soundtrack. Nothing eases the pain of standing on the outer edge of a pack during a blizzard on the verge of starvation and metabolic shutdown than "We're All in This Together."

Capitalizing on the popularity of penguins, who have displaced the morbidly obese in Hollywood as the de facto generators of lazy comedy (we all know, from Eddie Murphy movies to Big Momma's House to Tyler Perry that everything fat people do is hilarious, but we are just beginning to discover that everything penguins do is hilarious, like surfing, dancing, or getting eaten), Club Penguin was founded by three Canadian dads in 2005. The site is ad-free, which makes it all the more un-monetizablelicious.

Disney paid $350 million for Club Penguin. The site must be huge to generate a price that’s almost 70% of what MySpace went for, right? Here’s the kicker – the site has 700,000 users. That means that Disney paid $500 per user (on what we’re sure is a pretty sad revenue number). Disney, deciding this wasn’t ridiculous enough, has promised another $350 million by 2009 if the site meets its growth targets.

The Wall Street Journal reports that the Club Penguin founders “decided to sell now because the company had got to a point where it needed a partner to grow.” That and they realized they hit the jackpot by coming across a drunkenly irrational mouse.

When Zuckerberg heard this, he instantly upped the required facebook bid in his head to $35 billion.

Disney Buys Kids' Social-Network Site [Wall Street Journal]

Disney has officially lost its mind. The Immodest Mouse bought Club Penguin, a social networking site for the tween and pre-tween demo. As the name suggests, Club Penguin allows you to make your own penguin avatar and enter a virtual world where you can endure the brutal, constantly near-death existence of a penguin to the High School Musical soundtrack. Nothing eases the pain of standing on the outer edge of a pack during a blizzard on the verge of starvation and metabolic shutdown than "We're All in This Together."

Capitalizing on the popularity of penguins, who have displaced the morbidly obese in Hollywood as the de facto generators of lazy comedy (we all know, from Eddie Murphy movies to Big Momma's House to Tyler Perry that everything fat people do is hilarious, but we are just beginning to discover that everything penguins do is hilarious, like surfing, dancing, or getting eaten), Club Penguin was founded by three Canadian dads in 2005. The site is ad-free, which makes it all the more un-monetizablelicious.

Disney paid $350 million for Club Penguin. The site must be huge to generate a price that’s almost 70% of what MySpace went for, right? Here’s the kicker – the site has 700,000 users. That means that Disney paid $500 per user (on what we’re sure is a pretty sad revenue number). Disney, deciding this wasn’t ridiculous enough, has promised another $350 million by 2009 if the site meets its growth targets.

The Wall Street Journal reports that the Club Penguin founders “decided to sell now because the company had got to a point where it needed a partner to grow.” That and they realized they hit the jackpot by coming across a drunkenly irrational mouse.

When Zuckerberg heard this, he instantly upped the required facebook bid in his head to $35 billion.

Disney Buys Kids' Social-Network Site [Wall Street Journal]

Facebook is now ripping people away from Google. Gideon Yu, YouTube's former finance chief, has joined the social networking site as CFO, replacing Mike Sheridan, who will be summarily executed.

Yu's career path is a microcosm of the flow of Tech company buzz. Yu was the treasurer at Yahoo, then joined YouTube to help negotiate the $1.7 billion sale to Google. Yu stuck around at Google, turning down plans to become a partner at VC bastion Sequoia Capital. Not one to be confused with a loyal employee, Yu's made all these moves in the past year. While crossing his fingers behind his back, Yu commented, "I'm hoping this is my last job for a long time."

Mark Zuckerberg is fully aware of the implications of nabbing Yu, and is quoted in the Journal, saying "I consider it kind of a coup that we were able to recruit him here." Zucks affirmed the notion that he is not looking to sell facebook, dress like a grown-up, or IPO anytime soon, however people in the loop believe that facebook is on a 2 year IPO time table if it doesn't get scooped up.

Facebook Hires Yu as Finance Chief [Wall Street Journal]

Why do companies keep lowballing facebook? Zucks can't figure it out. He's got the lofty, world-changing rhetoric and strangely consistent fashion sense down (one man's black turtleneck is another man's sandals). You would figure that the ridiculous offers should just fall in line with the expectations of the VC investors that have chugged the most Kool-Aid. Simple market bubble physics 101.

Unfortunately for paper coffers in Silicon Valley, it seems potential acquirers only want to pay a 20x revenue multiple for facebook, opposed to the 60x+ multiple the company wants. Insiders like initial investor Peter Thiel think the company is worth $7-10 billion, which would give Zucks a nice $2-3 billion to buy sandals with. Viacom recently valued facebook at $3 billion. The discrepancy will most likely force facebook to stay single until an IPO.

Facebook is expected to make $150 million this year (you read that correctly). With the addition of well marketed widgets and rapid tween growth, revenue is sure to surge to several billion dollars next year (says the irrational bubble buyer of old), or at least a couple hundred million bucks in the real world. That's less than $4 per user. Getting a certificate for the purchase of 30 million un-monetized eyes (with notoriously low ad response rates) isn't as satisfying as getting an actual revenue stream, and tweens have fickle loyalties.

Facebook to remain swinging single [The Deal via DealBook]

DealBook reports that the increasingly nauseating FaceBook (inverse proportion to number of widgets added per day) has gone and bought itself a company. These are the details: the company is called Parakey (Latin for ‘the ability to belt-buckle bob for a Harvard drop-out’). It’s a start-up which had previously been “trying to bridge the gap between information hosted on the Web and data stored on computer hard drives” (translation: two FaceBook users). Parakey was founded and staffed by two people, Blake Ross and Joe Hewitt, “best known for their contributions to Firefox” (translation: they surfed the net a lot using Firefox, not Explorer). The terms of the deal were not disclosed.

Facebook Makes First Buy [DealBook]

If Mark Zuckerberg wants to know what it’s like to be touched by Sergey Brin and Larry Page (A. Weird at first, then really kind of nice), he’s going to put it out there in no uncertain terms, Brin told DealBook Sun Valley correspondent David Carr yesterday in Sun Valley. “We don’t really look at companies for acquisitions unless they are really interested,” Brin said, not saying that he’s run into with “mixed signals” before but seeming to imply it. “If they come to us, we’d certainly be open to talking,” he added, meaning “You come 90, we’ll come 10.”

Facebook, who turned down a $1 billion offer from Yahoo last year is under the impression that Google et al will want it for its new “Platform” (and mind) at least $2 billion. FB’s recent “growth spurt,” open policy, etc, also has people talking about a big buy, although there are some around these part who think Facebook’s crossover from exclusive to inclusive* (plus its insistence on overloading the page with, what’s the word, crap) should be a signal to companies to stay away and let the thing IPO itself in 2009.

Sun Valley: Google and the Facebook Question [DealBook]
Google's Brin Says Won't Pursue Facebook [CNBC]
Exploding Bubbles: Facebook Widgets And Your Butt [Wired]

*while lacking the intrinsic trashiness that makes MySpace’s spread legs okay

In the Web 2.0 parlor game of deciding who's going to buy facebook, guessing "Google" isn't exactly earth-shattering, but it's probably the most accurate guess one could make. Saul Hansell of the New York Times Bits Blog does just that, reasoning that Google might buy facebook just to cockblock rivals (a little too late for that, as I'm not sure any of Google's rivals would pony up the $$ at this point). Our guess at DB is "none of the above" - since we don't think any company will (would or should) pay what Zuckerberg wants for his "platform," and the thing will just IPO in early 2009 or even late next year.

Facebook's growth, and more importantly, it's marketing, give Zuckerberg most of the negotiating leverage when it comes to a potential deal. From the Bits Blog:

The bottom line is that this gives Mark Zuckerberg, Facebook’s young founder, chief executive and largest stockholder, a lot of options. He can sell the company for a lot of money, take it public or just grow with internally generated cash as was the strategy at Google, a company he idolizes.

By the way, if Zuckerberg does sell, my guess is that it’s Google that buys Facebook. Yahoo needs it much more. But Google has a penchant for using its financial muscle to keep hot companies out of the hands of rivals (wresting YouTube from the News Corporation and DoubleClick from Microsoft, for example).

3.6 Million New Faces [New York Times Bits Blog via DealBook]

Apparently, social networking hinges on an individual’s quest for freedom (MySpace) and civilization’s demand for conformity (Facebook).

According to a project by tech researcher danah boyd, who is so down with dotcoms that she legally ee cumminized her name, Facebook is for college preps and MySpace is for Latin Kings, or at least economically depressed, goth-wearing, gang-banging, extreme bass-playing meth addicts.

This shouldn’t be that much of a surprise, since Facebook started out at Harvard, then migrated to other Ivy League schools (and MIT), where the site is currently most entrenched as a percentage of the student body (we completely made that statistic up, but suspect it’s true, especially at Harvard).

Class differences are also becoming apparent, with the proletariat more MySpace leaning (also no surprise with Facebook’s Ivy League bent). Almost half of Facebook (which is capitalized in the media due to the media’s giant hard-on for the site but not on the site itself) users have a household income over $75k while less than 40% of MySpace users do (those numbers are from Comscore).

A problem with any research involving social networks - about half of social networking users use more than one site, so the Harvard grad by day is most often a timpani player in a goth Architecture in Helsinki cover-band at night.

Why MySpace is for freaks and Facebook is for preps [Machinist]
Social network site users 'are chronically unfaithful' [Times Online]
Measuring the social networking divide [Valleywag]

After activist shareholders pushed Terry Semel out of Yahoo last week, his successor Jerry Yang needs to raise the floundering search engine’s advertising revenue quickly or re-don his jester cap as Chief Yahoo. Social networking is the obvious answer and after a potential Yahoo-Facebook deal fell apart earlier this year, Rupert Murdoch is the man to see. The Times of London, a News Corp. holding, reported yesterday that Murdoch and Semel had been in talks to trade MySpace for a 25% ($10-12bn) stake in Yahoo.

It is more than likely that Yang will pursue this deal with the leading social networker, even at Murdoch’s inflated price. Rupe paid $580mn for MySpace two years ago, but after Facebook’s financer said he wouldn’t sell for less than $8bn, a $10bn MySpace shouldn’t be anathema to Yahoo. If Yang balks at the Murdoch proposal, it may go down with Semel’s infamous missed opportunity to buy Google and will probably mean an interim-only CEO appointment.

With the news, Yahoo traded up 1.6% to $28.08 and News Corp. was up 1% to $23.92.

Yahoo! For MySpace? [Forbes]
The social network bubble [Valleywag]

Meredith Viera, who got rejected from Harvard, interviewed Harvard dropout and paper billionaire Mark Zuckerberg on the Today Show, in a strangely smiley /flirty /happy /clappy /slightly unnerving affair. Zuckerberg's mom and sister, who is employed by Facebook, were standing by with paper million dollar grins, looking especially smiley. Fortunately, sugar relative Zuckerberg didn't compromise his core values, centered around casual dress and sandal wearing, for a national television audience. Meredith Viera gushed over the beauteous low maintenance of it all (score one for the Facebook PR team), and the two exchanged giddy glances over obscene wealth to come. I don't even know what to make of the interview, but let's just say - things got weird.

In other news, if you haven't heard, Facebook now supports widgets, which are supported by several other less market-savvy social networks and web platforms. Many are underwhelmed at the 2-week old functionality of the new "platform," which is, granted, 2 weeks old.

The internet's newest prince [Valleywag]

UPDATE : Turns out this whole thing may have been a hoax, if you refer to the "official letter" from facebook on the petition group's page.

Here is the original story:

Gay Arabs have been banned from facebook. Actually, facebook just forced the shut-down of the group "Arab LBTG" after facing pressure from Saudi Arabia, Egypt and other fun places. Does this mean that prominent clerics (druids, rogues and wizards) troll social networking sites looking for offensive material, tagging every Arab with a beer funnel or cleavage shot?

There is already a facebook group in protest - "You might be an official Petition to prevent Arab LBTG from being shut down, if ...bitch!"

Facebook [or someone posing as a facebook admin] sent a very formal letter to the original group, which contained the following (kind of whiny) plea:

You have violated the terms of conduct you agreed upon when you signed up with Facebook.com. Your violations fall in the following criteria:

(...)Creating a global group that is not allowed in some regions. Your group "Arab LBTGAY(Lesbian,bisexual,transexual and gay)" has put facebook in trouble as we received an official complaint from the Saudi government, the Egyptian government and other Arab governments that do not want to be mentioned. Your Group must be shut down or a new Group with a specified network other than the two mentioned may be created. We are very sorry as we support any group but the countries mentioned are threatening to block our server from their side, therefore please comply.

Can facebook stipulate that users should not 'create a group that is not allowed in some regions'? Is that the user's responsibility? Liability has not been clearly defined in the social networking sphere (anyone know of any pending legal battles?), and facebook is setting a precedent of holding users responsible for the site's access points (and policing content).

Facebook kills Arab LBTG group to appease mideast govs - [BoingBoing]

We realize the inherent hypocrisy of us mocking another for his/her "innappropriate use of a company computer" (our workday is divided equally between cuteoverload.com and online betting, in case you were wondering) but it's like we always say, "When has inherent hypocrisy ever stopped us before?" (This is Dealbreaker, for god's sake. We're not exactly waiting on those humanitarian awards, deserve them as we may). With that, we give you Charles, an Oxford University (Christ College) grad employed in Fixed Income Structuring at Goldman Sachs, who apparently lives with a crippling (or not so much) addiction to Facebook, and who, most recently, counts himself among those with a blatant disregard for flaccid threats emitted from the trolls in IT. Basically, he's us, but without the meth problem. We're not sure whether to put him in time-out or buy him a drink (on John, natch). At the very least, we'll be sending him a friend request

Dozens of the world’s biggest media moguls and investment bankers, dressed in perfectly pressed suits, mingled in the lobby of the Pierre Hotel in Manhattan yesterday at the annual FourSquare conference.

And then there was Mark Zuckerberg, the 22-year-old chief executive of the social networking site Facebook, wearing Adidas flip-flops — sans socks — with a blazer and jeans.

The Dress Code Is Relaxed, but the Courting Is Intense [NY Times]