Facebook: Microsoft’s Trojan Horse?

Art Credit: Doreen Lam

The Aeneid tells us that the Greeks, weary of their 10-year siege of Troy, built a huge wooden horse, filled it with their best warriors, and left it outside the city gates. The Trojans watched the rest of the Greek army withdraw. That night, they pulled the horse inside and celebrated what they thought was the end of the siege. When the Trojans were asleep, the Greek warriors emerged from the horse and opened the gates for their colleagues, who joined them in sacking the city, killing all the Trojan men, and enslaving their women and children. Out here in Silicon Valley, we might be slaves to technology, but never to one company. Microsoft dominates the software business the way the Greeks once dominated the world, but the Valley has always put up a fight. Resisting Bill Gates’ army has become a way of life. Before rediscovering innovation with the iPod and slick new laptops and iMacs, Apple almost knuckled under against the Windows onslaught. Many programmers in the Valley swore they’d never be taken alive: working for Microsoft was seen as going over to the dark side. Survivors of Netscape (defeated by Internet Explorer and then acquired by AOL) went on to form Mozilla, the open-source company responsible for Firefox and Thunderbird. Yahoo runs on Linux, Apache, MySQL and PHP, the so-called LAMP technologies that have put a serious dent in Microsoft’s Web server business, while Google offers free word processing and spreadsheet programs complete with online storage.

Silicon Valley developed a collaborative paradigm aimed at preventing a Microsoft monopoly. By giving the public free access to intellectual property, the blueprints to programs and the source code necessary to compile them, Valley companies hoped to contain the spread of Windows programs that were often bloated and costly. Social networking was meant to advance this paradigm. Programmers used the loose collection of technologies known as Web 2.0 to rise above the limitations of any one operating system. The online communities that had started out as gathering places, where members could find others with the same interests, morphed into marketing platforms for rock bands. MySpace spread like a virus, attracting the warrior-king himself: Rupert Murdoch, whose News Corp. paid $580 million for the privilege of hosting nearly 25 million members, a number that has quadrupled since then.

Mark Zuckerberg, founder of Facebook, followed the Bill Gates model by dropping out of Harvard to start his own company, but he wasn’t trying to take over the world. After establishing a strong base among college students, he opened Facebook to the general public. People who had never considered joining MySpace used Facebook to make new contacts—for business as well as social purposes.

Facebook published a developer’s toolkit to encourage programmers to write plug-in applications. The collaborative paradigm was alive and well, but that’s when the feeding frenzy began. Both Google and Yahoo coveted the chance to sell online ads to companies eager to reach Facebook’s 50 million members. The two companies approached Zuckerberg with offers to buy a small percentage of his company. No one in Silicon Valley doubted their intention to leave things the way they were. Why tamper with success when all you want to do is advertise? However, when Microsoft also approached Facebook, the Valley felt a collective chill. Would Zuckerberg go over to the dark side? Would he make a Faustian deal to gain personal riches?

On October 24, 2007, having just recorded its best quarterly performance in eight years, Microsoft announced that it had reached an agreement to purchase 1.6 percent of Facebook for $240 million, effectively valuing the company at $15 billion. Zuckerberg, who owns one-fifth of the company, is now worth $3 billion—as we say in the Valley, he’s got three units. The losing teams at Google and Yahoo did not advance their careers. Investing in Facebook was a once-in-a-lifetime opportunity, as their managers will doubtlessly remind them, but what happens now? It would be out of character for Microsoft to sit on the sidelines while collaborative development threatens its flagship products. Will Facebook become part of the Windows operating system, like the products of other startups that were subsumed under the Microsoft brand? Probably not, but it’s reasonable to expect a tighter link between the two companies. Bill Gates rolled his Trojan horse to Zuckerberg’s front gate. Facebook’s legal and business advisors convinced Zuckerberg to take it inside and play with it. It’s just a small investment, but it only takes a few warriors to open the gate for the rest. Let’s hope that Zuckerberg, or whoever succeeds him, has the fortitude to keep this social network open. It would be a shame to log on one day and be redirected to Microsoft Central.