Who Will Buy Facebook?

Last week billions of dollars changed hands in online related acquisitions. Anything that is worth buying is being bought.

The rumors that Yahoo is in talks to acquire Bebo for $1billion may have seen wild 2 years ago, but in today’s online market compare favorably price wise. Consider that Microsoft didn’t even blink when it acquired aQuantive for $6billion and Yahoo was previously said to have bid up to $1.6billion for Facebook.

Facebook remains the missing acquisition at the top end of the market.

There has been speculation on Facebook’s future previously. In December 06, after turning down attempts by Yahoo to buy the company there was talk that Facebook may be headed towards an IPO. Six months later we haven’t heard anything more on the plans.

At some stage though, something has to change with Facebook. Investors Greylock Partners, Meritech Capital Partners, Accel Partners and others have pumped $38.2 million into Facebook since 2004. In a Fast Company profile piece Facebook CEO Mark Zuckerberg continues to spin the line that Facebook will remain independent, and yet there isn’t a venture capitalist alive who doesn’t have an exit strategy.

So who will buy Facebook, or will it go down the IPO path?

We can rule News Corp and Yahoo out. News Corp owns market leader MySpace and Facebook would seem an illogical buy. Yahoo would be out of the race on the presumption that they are looking to acquire Bebo and have failed to buy Facebook previously.

So who is left? There were rumors that Viacom was interested in Facebook last year. Viacom is still a possibility, but with a price tag for Facebook of something in the range of $3-$6 billion, it would be a stretch for a media company that has always been more conservative with online investments.

The obvious candidate is Google.

Google’s social networking site Orkut may be popular in Brazil, but it has failed in gaining headline making market share in the rest of the world.

Google is cashed up and isn’t shy about spending large sums on acquiring sites, particularly ones with a big audience. Facebook’s revenue would not be an overwhelming consideration for Google; the YouTube acquisition being a case in point.

It could also be suggested that Facebook answers the “what will Google acquire next?”question.

YouTube was acquired to give Google dominance in video. DoubleClick provided traditional online advertising technology and clients to compliment Google’s domination of the text advertising market. Facebook comes not only with a large number of users. According to comScore Facebook is also the No. 1 photo sharing site online, with 6 million photos uploaded daily. Facebook would not only deal Google back into the social networking market in a big way, it would also give Google dominance over Yahoo’s Flickr and the now News Corp/ MySpace owned Photobucket.

Mark Zuckerberg may well espouse his desire to keep Facebook independent but the decision won’t be up to him. He’d also be crazy brave to close his door if Sergy Brin & Larry Page come knocking.

An IPO is still a possibility, but it’s a risk compared to the acquisition path. User loyalty is fickle and Facebook as a stand alone entity would be a high risk investment. Investors would be gambling on not only future growth and user loyalty, but also a risk that Google, Yahoo or even Microsoft could build or acquire a competitor that could pose a serious risk. An acquisition would not only take a future competitor away; it would provide untold leverage in assisting Facebook in its quest to become the social networking destination of choice.

Previous TechCrunch Facebook coverage here.