A Radical Idea for Facebook

I had a radical thought while chatting with a colleague today. It came from an idea I had about what direction Facebook might want to take to continue to grow and be more than sharing personal news and photos. Facebook should try to buy Yahoo!

Yes, it sounds like a crazy idea. It probably wouldn’t work. But here are some reasons why it might make sense in the longer run.

Search

Yahoo! already has search capability. They have technology that works, and just because it isn’t popular doesn’t mean it isn’t good. Facebook could augment that search with what they know about a Facebook user, potentially tuning the search results (if the person asks for it) to better match that knowledge. Being able to have a smarter search that is more contextually sensitive could mean more relevant results. It could also boost the value of Facebook advertising, since it could also be more contextual (much like ads through Google are today).

News and Information

Yahoo! has built up some respectable infrastructure when it comes to organizing and presenting news and other information. There is already a connection between Yahoo! and Facebook for news, allowing users to indicate what they are reading, or articles they are interested in. Making this built-in to Facebook, and putting news into people’s data stream, again relevant to their interests, background and previous queries, could make reading news better. The news could be more relevant. It could help people find things they might not normally see.

Flickr

The Flickr service would be a better replacement to the rather crude photo sharing that Facebook has now. What Facebook does have is the tagging and social sharing features. Bringing those together could find value in Flickr, and make Facebook better in this respect.

Advertising

Yahoo! is still a significant player in the on-line advertising market, although not nearly as big as Google. Still, this would give Facebook a footprint in mobile and on-line advertising, and bolster their ad efforts.

Others?

There could be other synergies, but the four listed would be the key ones in my mind. It is a rather left-field kind of idea. It would only make sense if Facebook can get Yahoo! for a good price. There are shareholders that may want a premium price, but then again, they might be willing to take a chance if they get FB shares in exchange for Yahoo! shares, rather than pure cash. Facebook has a tradable asset, in the form of publicly traded shares, and they could use those instead of burning up real money a deal.

The deal would come with problems and challenges. Dealing with their issues and China and Japan will be one challenge. Finding a way to integrate the technologies, and getting Yahoo! into the Facebook culture, will also be significant obstacles. It wouldn’t be easy, but it could prove valuable in the future.

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