Here’s what we don’t know:

What does it say about Facebook that Google was unwilling to drop $240 million for a piece? 

Google would pay 10X that for the right opportunity, and CEO Eric Schmidt commented yesterday, “We understand the math very well.  Some competitors might be willing to spend larger amounts of money beyond their ability to monetize."

Analysts have been quick to do the “quick math” on a $15 billion Facebook valuation, but that only works if you believe the 1.6% stake was really worth $240 million.  And for now, at least one major player does not. 

So how much did Google offer?  We’re unlikely to ever know the actual amount, but you can bet they didn’t lose the negotiation over $10 million.  Suppose they came in far short of Microsoft with $150 million.  At 1.6%, that would value the company at $9.4 billion.

Now, that said, it’s possible the bidding was much tighter, and
for reasons known only inside Facebook they decided a Microsoft partnership made more sense.  After all, they’ve worked together since August 2006 when Facebook had 9 million registered users. 

But if you step back for a minute and consider the price, not the percentage, it’s almost comical imagining Google and Microsoft in a bidding war over the internet’s hottest real estate for $240 million. 

If Facebook really is what some people believe – the future door through which people enter the internet – shouldn’t that be worth much more than $240 million?  Perhaps it’s not, and perhaps $240 million is a high price for 1.6% of any company (and certainly a company worth $15 billion is no small fry).

Yet Google didn’t go for the jugular, as they often do, and reach into their cash-rich pockets for a number Microsoft couldn’t match.  They stayed away, something we’re quite unaccustomed to seeing.  And given their track record, it begs the question once again: Why didn’t they win the bid?

Again, it might simply have come down to preference for Facebook.  They might have preferred to work with Microsoft, all else equal.

But it’s interesting nonetheless: Google, so often right in every move and decision, stayed away from Facebook.  It may take years to understand why, or we may come to see it as one of the company’s biggest missed opportunities.  Then again, they might know something about Facebook that Microsoft does not. 

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