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Don't Buy Latest Dot-Com Hype, Mag Warns

Economist finds holes in social net sites like Facebook, MySpace

By Zach Samalin,  Newser Staff

Posted Oct 18, 2007 3:15 PM CDT

(Newser) – While Facebook and other online social networks are growing like digital weeds in Silicon Valley, their popularity may be more a product of hyperbole than actual developmental potential, the Economist argues. But major internet speculators Google, Yahoo, and Microsoft don't seem to care, as each bids billions to buy Facebook, whose 2007 revenue may be only $100 million.

Though some tout Facebook as the new Google, the idea of the "social graph" championed by founder Mark Zuckerberg is no news in computer science. And it misses a major point: Google works to match advertisers with potential customers based on particular search terms; Facebook has only "large crowds who are communicating without expressing specific interests," says one online advertiser.

Chairman and CEO of News Corporation, Rupert Murdoch, right, and Chris DeWolfe, left, Chief Executive Officer and Co-founder, MySpace answers questions during a talk at Web 2.0 conference in San Francisco, Wednesday, Oct. 17, 2007.The Web 2.0 Summit, a conference for startups and other companies focused on...
Chairman and CEO of News Corporation, Rupert Murdoch, right, and Chris DeWolfe, left, Chief Executive Officer and Co-founder, MySpace answers questions during a talk at Web 2.0 conference in San Francisco,...   (Associated Press)
Microsoft CEO Steve Ballmer raises his arm as he talks about companies who want to talk to Microsoft, at the Web 2.0 Summit in San Francisco, Thursday, Oct. 18, 2007.  During an animated discussion at the summit, Ballmer took a paternalistic tone, comparing Google _ which went public in...
Microsoft CEO Steve Ballmer raises his arm as he talks about companies who want to talk to Microsoft, at the Web 2.0 Summit in San Francisco, Thursday, Oct. 18, 2007. During an animated discussion at...   (Associated Press)
Microsoft CEO Steve Ballmer laughs as he talks at the Web 2.0 Summit in San Francisco, Thursday, Oct. 18, 2007.  During an animated discussion at the summit, Ballmer took a paternalistic tone, comparing Google _ which went public in 2005 but has already become the second most valuable company...
Microsoft CEO Steve Ballmer laughs as he talks at the Web 2.0 Summit in San Francisco, Thursday, Oct. 18, 2007. During an animated discussion at the summit, Ballmer took a paternalistic tone, comparing...   (Associated Press)
EBay CEO Meg Whitman speaks the Web 2.0 Summit in San Francisco, Thursday, Oct. 18, 2007. (AP Photo/Paul Sakuma)
EBay CEO Meg Whitman speaks the Web 2.0 Summit in San Francisco, Thursday, Oct. 18, 2007. (AP Photo/Paul Sakuma)   (Associated Press)
The August, 20-27 double issue of Newsweek (on newsstands Monday, August 13), The Facebook Effect looks at how Facebook, the wildly popular networking site is growing up and facing new challenges to become a fixture in the digital age; excerpts from the Newsweek/Kaplan How to Get Into College Guide, the...
The August, 20-27 double issue of Newsweek (on newsstands Monday, August 13), "The Facebook Effect" looks at how Facebook, the wildly popular networking site is growing up and facing new challenges to...   (Associated Press)
Facebook.com's mastermind, Mark Zuckerberg smiles at his office in Palo Alto, Calif., in this Monday, Feb. 5, 2007 file photo. The owners of a rival social networking Web site are trying to shut down Facebook.com, charging in a federal lawsuit that Facebook's founder stole their ideas while they...
Facebook.com's mastermind, Mark Zuckerberg smiles at his office in Palo Alto, Calif., in this Monday, Feb. 5, 2007 file photo. The owners of a rival social networking Web site are trying to shut down...   (Associated Press)
Facebook.com worker Ginnie Chan, left, works at Facebook headquarters in Palo Alto, Calif., Monday, Feb. 5, 2007. Facebook has avoided the acquisition frenzy that's gobbled up MySpace.com, YouTube and other startups, and the company is now striving to become a general portal like Yahoo, not just a social...
Facebook.com worker Ginnie Chan, left, works at Facebook headquarters in Palo Alto, Calif., Monday, Feb. 5, 2007. Facebook has avoided the acquisition frenzy that's gobbled up MySpace.com, YouTube and...   (Associated Press)
Chairman and CEO of News Corporation, Rupert Murdoch, listens to questions during a talk at Web 2.0 conference in San Francisco, Wednesday, Oct. 17, 2007. The Web 2.0 Summit, a conference for startups and other companies focused on social networking and other new ways of communicating using the...
Chairman and CEO of News Corporation, Rupert Murdoch, listens to questions during a talk at Web 2.0 conference in San Francisco, Wednesday, Oct. 17, 2007. The Web 2.0 Summit, a conference for startups...   (Associated Press)
Facebook founder Mark Zuckerberg smiles during a talk at Web 2.0 conference in San Francisco, Wednesday, Oct. 17, 2007. (AP Photo/Paul Sakuma)
Facebook founder Mark Zuckerberg smiles during a talk at Web 2.0 conference in San Francisco, Wednesday, Oct. 17, 2007. (AP Photo/Paul Sakuma)   (Associated Press)
Chris DeWolfe, left, Chief Executive Officer and Co-founder, MySpace talks during a talk at Web 2.0 conference in San Francisco, Wednesday, Oct. 17, 2007. The Web 2.0 Summit, a conference for startups and other companies focused on social networking and other new ways of communicating using the Internet....
Chris DeWolfe, left, Chief Executive Officer and Co-founder, MySpace talks during a talk at Web 2.0 conference in San Francisco, Wednesday, Oct. 17, 2007. The Web 2.0 Summit, a conference for startups...   (Associated Press)
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