Whenever you see a report such as this one, published today in the Wall Street Journal, you should ask yourself who the source might be and why he or she might be providing the information.
So, let’s consider the story. According to "people familiar with the matter," Facebook Inc. is close to choosing between Google Inc. and Microsoft Corp. to sell ads for the social networking service outside the U.S. What’s more, "these people say," in a related negotiation, the winner of the international ad sales partnership is expected to buy a minority stake in Facebook as part of a financing round.
What else? Well, there’s this:
Microsoft and Google are both pressing hard this week to land the deal, with top executives including Microsoft Vice President Hank Vigil and Google Vice President Tim Armstrong traveling to Facebook’s Palo Alto, Calif., headquarters for negotiations. A Facebook decision could come as early as Wednesday. The New York Post earlier reported that a Facebook deal announcement was expected within the next day or two.
The authors of the story also write that the companies involved have discussed a Facebook in the range of $15 billion. They’ve "discussed" it, mind you, not agreed to it.
And that’s the piece to this puzzle. Reading between the lines, it would seem that Facebook, or an investment banker associated with the company, is the source of this story. The objective of leaking this information to the Wall Street Journal is to put pressure on either Microsoft or Google (or both) to either acquiesce to Facebook’s valuation demand or to provide commensurate value by cutting a sweet advertising deal.
Facebook is not exactly naive in its dealing with the news media and the blogosphere. As pointed out elsewhere in the Wall Street Journal today, "every time a news story surfaces about someone buying or investing in Facebook, the social-networking site’s valuation climbs."
It’s amazing how that works, isn’t it?