So, after weeks of speculation, Microsoft won the battle over Facebook, with Google second, and Yahoo embarrassingly nowhere to be seen.
Let me explain.
Social networks are hot, hot, hot, right now. It doesn’t really matter which one you prefer–MySpace, Bebo, Facebook, or Dogster–social networks are the next evolutionary step in the growth of the internet. Now that we’ve all learned to check our email, order online, research restaurants, and read news, we’re starting to use the web to connect with each other. We’ve realized that we enjoy making connections, sharing our random thoughts, and turning our friends into virtual zombies. Social networking is the second generation internet.
Unfortunately for Microsoft, social networks have to be perceived as cool, exciting, trendy places to hang out at. None of those words apply to Microsoft–sorry guys. But, just like the rich kid in school, Microsoft has enough money to buy itself some friends–or in this case, a network of friends. For Microsoft, the only choice was to buy a piece of a popular social network. No one would ever feel excited about joining a network called “Windows Live MyBeboBook.”
Then there’s Google. How cool is Google’s brand? Uber-cool. When Google launches a new product–heck if Google hints at a new product–the whole world goes nuts. Along with Apple, Google has one of the best brands in the world. A brand that can make us all drool and pander after their every announcement. When Google farts, we want to have our nose close by–that’s how much Google is loved.
If Google really wants to build a popular social network, it can. I’m not talking about the crappy science experiment they call Orkut–you don’t expect a social network to become popular when it sounds like a pest control company–but a real “Google” social network. A social network that already has all of the pieces in place: email, instant messaging, blogs, image and video sharing. If Google really wanted to own a social network, it could take the $240M it just saved and put that towards building a kick-ass one. A few rumors, closed beta invites, and denials of competing with MySpace later, and the whole world’s going crazy over Google Connect (or whatever they want to call it).
So you see, Microsoft had no hope other than to buy into an existing social network that was popular enough that even the “Windows Live blah blah blah” couldn’t slow it down. Google, on the other hand, knew it didn’t have to partner with Facebook at any cost, they could bide their time and decide whether they want to build their own social network.
Besides, give it a few more years and we’ll all have Google implants anyway–that’s when Google will tell us which social network we should join. 
UPDATE: Sure, MSFT has Windows Live Spaces, but with a 0.15% share (even Orkut is higher) and a focus on blog content, it’s hardly something the company can rely on.
