back to article Is Facebook worth more than Google?

We've certainly entered the silly season of Silicon Valley tech valuations, but one company strikes me as not richly valued enough: Facebook. You can argue about the company's privacy policies, its data hoarding policies, its choice of that ugly blue but one thing seems beyond doubt: Facebook is worth at least as much as Google …


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  1. bojennett

    Facebook is a scam

    I like facebook, and I use it a lot, but there is no way that FB should be valuated at $75b. I have dozens of FB friends, but only about 3 or 4 who are active. The rest do nothing. Every few days, they may pop on to see what I've said, but they don't post anything of their own. Yet, those same people use Google several times.

    There is a reason FB has resisted going public for this long. Once people can really look at the number of active eyeballs, it will be seen that their numbers are inflated. FB is like any other Internet company - a lot of casual viewers, but only a small cadre (less than 5%) who are active users. No different from Digg, for example.

    The only reason it hasn't gone public yet is because Goldmann Sachs has not hyped up the investment enough so that they can make kajillions of dollars off of the IPO, leaving the rest of the folks holding the bag. Once they get that right, FB will go public, will soar on the first day, and then crash hard.

    Again, I'm not a FB hater. I like FB. But this is just crazy. I can't believe we are going to relive the tech bubble mania of the 1990's. Apparently, nobody learned anything.

    1. Anonymous Coward
      Anonymous Coward


      Completely agree. I consider myself a relatively normal person and of my 100 or so facebook 'friends' (I've no idea how many, because it really doesn't matter to anyone but Facebook), maybe a dozen post regularly. Most of those are pictures of their dinner or telling me they've just checked in at a railway station.

      I don't care.

      So, where's the business model here? This writer claims 'social' is the key to all human commerce. Nonsense. I went to the supermarket today, nothing social there. Far from it. In fact, there IS an algorithm at play: when you go shopping, you consider parameters such as 'who is cheapest?', 'which is closest?' or 'which has the best quality product?'. All these feed into the choice of vendor. I do not choose my supermarket based on the manager friending me on facebook.

      Social means going to the pub and having a normal conversation with normal people, not buying into some crappy group voucher for a cheap manicure that will put the promoter out of business because they have given half their cash to Groupon to give a special offer to a bunch of people who won't provide repeat business because they'll just wait for the place down the road to do their own promotion.

      And if you do want to carry out some kind of transaction based on recommendations, there are niche verticals for that.

      As the author himself states, Facebook are capturing more of the mobile traffic. Because of the limited real estate, there are no ads, so how do they monetise this? And where are the games? Maybe they're there, but again, I don't care and neither do most people I know. I go to the facebook website on my pc maybe once a month, if that. Maybe they're hedging on everyone having an iPad?

      Google have a more sustainable business model. They have a respectable portfolio of business applications, from mail services, to Google Apps to App Engine. Facebook on the other hand can offer your brand a 'like' facility that will make your marketing department wet themselves until the next shiny thing comes along.

      No, Facebook is overvalued and has a lot more to lose than Google.

      This article is representative of the sort of lunacy from the original dot com bubble that is starting to reassert itself in the Valley. Stop it.

    2. Rafael 1
      Thumb Up

      Why $1tb?

      It isn't a lot of money these days. Ask for One... Hundred... BAJILLION DOLLARS!

      1. alwarming


        ... the idea of Facebook or iOS is the same : to be a platform where others will be compelled to build on top you, like M$ of yesteryears. That's the difference between myspace and facebook.

        Any app which requires a social component - "dating" being the obvious one (eg: zoosk / datehookup) - will find it easier to re-use facebook's user-base rather then build on a user base from scratch.

        The potential for brain dead social gaming is also endless as shown by zynga. If you don't know what zynga is I wouldn't be surprised but it's heading for a 900+ million dollar revenue this year (revenue, not valuation). If it was an isolated website, it would be lucky to reach 1 million in revenues. facebook keeps 30% of the revenue... about fair share, I would say.

        I am 35+. Me and my friends use facebook mainly for photosharing more than anything else and probably we are not targets of the social networking websites. Its the younger generation - in colleges/just out - where they are growing up with myspace, twitter, facebook and texting - the fundamental structure of "friend circle" has changed for them... I hardly had any overlaps between my circles.. but it's a common theme for youngsters to have 30-40% overlap between their circles. Why should it result in better valuation for FB ? There is no direct answer here, but it means more power to social networking tools.

        The other users of facebook are still evolving.. eg: it's acting as a news aggregator for communities.. eg: you can do a "like" on west minister abbey" or your local pub and you will get any updates on their calendars. You don't have to subscribe to their newsletter and then mark it spam a month later.

        In future, you might have to "pay" a dollar for a <like> (implying subscription) on "the Guardian" facebook. So it just becomes another app store like apple's - but even easier to buy.

        So yeah, facebook as a business is a little more than news feed from mostly absent friends.

        Bottom line: Is facebook valuation at 75 billion too low/too high ???? I don't know - the current $10-20 billions revenue suggests that a $50billion is definitely ON, except by most conservative evluation models designed for classic industries which have linear & predictable growth patterns.

        But anything beyond 100bill$ looks high (to me, a commentard). Why, don't I believe in the social networking fairytale ??? Well, I do believe that any fairytale will come to an end/plateau

        sooner or later. It did for Google. It will for Facebook.

        To end the long rant: let's say we all hate Apple, Facebook & Google for being evil in the ways they do things... take from us without our permission, snoop on us and in general they de-power us in our digital lives.... And our protests will keep them honest. But there is no denying that they are doing their part in shaping how 21st century will be, and for that, <respect>.

    3. CNXTim

      What about those numbers?

      In addition to the point you made about usage, must be added a factor for multiple aliases. Here's a wild guess, 4 per real user? As for the site visits, give me a break - i use an aggregation service that drops ALL my Social Media accounts into my email box twice daily - makes it easy to ignore the "chaff", consequently does FB have chance to pitch anything to me ? NO WAY. Add to that Mr Z's famous (they trust me, the dumb f...s) put-down of his customers and the value being talked up here is fanciful nonsense...

    4. Anonymous Coward
      Anonymous Coward

      Re: Facebook is a scam

      Congratulations, you've got 40 up-votes for completely missing the point.

      "Every few days, they may pop on to see what I've said" Thus reading and, apparently, clicking on adverts.

      "they don't post anything of their own" Who cares? Not facebook and not it's shareholders. In fact, up to a point (the point at which facebook becomes irrelevant), passive users are preferable. Eyeballs on ads without load on servers.

    5. hamsterjam

      Re: Facebook is a scam

      Your analysis is valid, up to a point. However I remember back in the 90's that the killer idea for the WWW was the "portal". Like so many other IT notions ("cloud", "client/server") "portal" meant whatever the would-be vendor meant it to mean.

      But just because the dogs bark and the caravan moves on doesn't mean that the portal was a bad idea, or even that it went away, because it didn't. It changed, it grew, and now Facebook is the portal that everyone was dreaming of back then.

      I once had a conversation with a car designer, who told me that he thought the SGI workstation that he designed cars on was an "Alias machine", because he only used it to run Alias software. He didn't realise that it could do other things as well, but he wasn't interested in finding out anyway.

      For the vast majority of people who use computing devices nowadays it's about the function. Not how it works, but what it does. If you are a complete beginner and want to use the Internet for digital communication then Facebook will have you up and running in minutes, seconds even.

      So IMHO the valuation of the company for the debt-money parasites is based on that fact. The technically-savvy and the quick learners have already been on-line for years, but Facebook opens up the web for the next set, those who haven't had the patience, or couldn't see the benefit or were intimidated by the jargon or whatever.

      Plus you don't need a PC any more - it's on phones as well these days. But whether it's a phone or a PC, for the new recruits it's a "Facebook machine".

      And if you own a piece of Facebook then all these newbies are belong to you...

  2. Anonymous Coward

    Author is on crack

    $75 billion valuation is "almost certainly too low"? Only someone with Silicon Valley bubble blinders could possibly think so, let alone consider for even a moment a valuation of a trillion dollars. To say he's delusional is an understatement!

    Facebook made a profit of $300 million last year (reported in the media from people who saw their finances as part of the Goldman Sachs offering) Their room for growth is rapidly dimishing, what with most Americans who will ever join it already joined, and limited prospects in other big markets like China or South America where competitors already dominate. Even if they eventually grew 10 times larger than they were in 2010, to a profit of $3 billion/yr, which would require pretty much everyone on the planet between 14 and 70 to join, it'd only be worth $30 billion at a traditional P/E of 10 for companies that have reached their growth limits (that's about what Microsoft is trading at these days, and they still do grow a bit)

    Sure, some will claim that they can increase their revenues, but I think people will be resistant to seeing a bunch more advertising and certainly most would refuse to pay a monthly fee - it would be the end of Facebook to even suggest such a thing.. It only took overlooking all the spam postings to cause Myspace to go from its dominant position into decline, so Facebook can't treat its users as if they're locked in.

    Already I notice amongst some of my friends who have been around Facebook for a long time like me a bit of Facebook fatigue, where status updates become less and less frequent. The most active users are a small segment of people who are really into it, and those who only joined in the past year or two for whom it is still fairly new.

  3. Flybert
    Thumb Down

    fb net income vs goog

    net income of facebook in 2010 .. about $500 million(?)

    net income of google in 2010 .. about $8,510 million .. 30% over 2009

    I really don't see fb increasing it's net income by 17 times to catch goog, and goog's increase in net income from 2009-2010 was $2,000 million .. 4 times fb's total net for 2010

    how does that translate in anyone's mind that fb is worth anything close to goog ?

    1. Sir Cosmo Bonsor


      It's called "Google"

      1. O RLY

        GOOG is Google's stock ticker

        The commentator should have capitalised it, though.

  4. SergeTheGreat

    The bubble is expanding

    Are we forgetting the end goal of a company is to make money?

    Google earned $29 billion in 2010 compared to Facebook’s estimated $2 billion.

    Isn't this "don't mind about a business plan, all that matters is the number of users" clearly a market bubble?

    1. John Smith 19 Gold badge


      "Are we forgetting the end goal of a company is to make money?"


      You're thinking about *quoted* companies or privately held manufacturing companies.

      The purpose of IPO's is to convert the owners large block of stock or "paper" into block of *cash* supplied by the new owners.

      The bigger the block, the better.

      Making a profit then becomes *their* problem, although the greater the *apparent* profit being made (or even the *potential* for such profit) the better chance you have of offloading in the first place.

      The book "Startup" is a nice guide to the internals of VC funding and how Microsoft handle competitors.

    2. Richard 12 Silver badge

      Revenue, revenue, revenue! Profit!

      If an established company has no revenue, then it's worthless. I don't care how many users you've got - no revenue means that those users are a *liability*, not an asset!

      For a new startup, it's more complicated as you're projecting forward to work out what revenues you are likely to get in the future.

      So very simply - Google and Facebook are both established. Neither are likely to have big revenue growth spurts without major acquisitions, they're both consolidating their market.

      Which has more revenue? Which makes more profit? Which has better margins?

      That's the data that tells you which company is worth more.

      Numbers of "Users" tells you nothing at all, especially as it's impossible to delete yourself from either.

      1. Anonymous Coward

        Not quite

        I discovered that it is now possible to disable an account on fb, and apparently it will disappear forever. I will believe it when I see it.

        The people with the greatest difficulty deleting themselves are deceased.

        I never figured out how to remove myself from google or hotmail for that matter

  5. Sandy106

    Is Facebook worth more than Google?


  6. Mark 65


    That has got to be one of the worst ever Zuckasms I've ever heard. First company to be worth over $1tn? Do me a favour. Hoarding the private data of millions of fuckwits will not get them over the line. They are the current fad, there will be another, and another, and another.

  7. nick47

    Facebook is too well established to go anywhere now.

    "I'll Facebook you later" has become a phrase in the same way that "I'll eBay some parts" or "Just Google the recipe" have. Once that happens, it's very hard to imagine that it could be replaced by something else. I don't think any web site is worth a million million dollars, that seems a bit over the top, but when the President of the United States has a page on your web site I think that's a pretty clear sign that you've become a firmly established part of the collective consciousness.

    1. Ken Hagan Gold badge

      Facebook owns social?

      "Once that happens, it's very hard to imagine that it could be replaced by something else."

      Tell that to hoover and biro, now small players in their respective markets despite being spelled with a lower case letter.

      I seem to recall that Murdoch paid a (then) huge sum for a social networking site, but I can't remember the name of the site.

      Beyond the basics like name, address and credit card details, most of the supposedly valuable personal info on Facebook is completely ephemeral stuff. Do you think anyone trawls the Stephen Fry archive? Of course not. They look at what he said today. What he said last week is barely a memory and if he started using a different site then within a month the "transition" would be complete.

      "Social" has a short half life. It needs constant input. If you try to own it, you'll simply find that your initial investment decays away to nothing.

    2. Roger Greenwood

      "Established" is not "Forever"

      You lack imagination. Like fax machines, nearly every office still has one, they just sit there for the most part unused and forlorn. 35 years ago it was difficult to imagine business life without Telex. 20 years ago it was hard to imagine life without Fax.

      Something else will come along to challenge FB in a minute. After all, the most assiduous FB users are kids. Fickle kids, who are used to getting everything for free. Good luck trying to squeeze money out of them.

      Sell it while it's hot.

    3. Rebecca 1

      Do you Hoover your house?

      I do. I don't however have a vacuum cleaner made by Hoover, like most people I know.

      After a while people will forget that Google, eBay and Facebook were brands rather than the generic name and will look for alternatives.

    4. Stuart 25

      Facebook becoming a common term counts for nothing in the long run.

      Another brand that is/was equally well established is Hoover. You go and Hoover the carpet, even go and buy a new Hoover.

      But the chances are it won't be made by Hoover despite the name becoming common currency.

      In the same way that to Google something means to search for something on the internet. You might be surprised to find that many people who say they are Googling something are not even using Google. They are often just using the search bar in their browser with little or no idea or interest on which search engine is being used.

    5. A handle is required

      "...too well established to go anywhere..."

      Yeah, just like MySpace.

  8. IGnatius T Foobar

    enough of fecesbook already

    Dunno about that. The only reason Facebook appears to have more traffic than Google is because Google is designed to get things done, while the only purpose of Facebook is to get people to spend more time on Facebook. I already went to high school once, I didn't like it the first time so why would I want to do it again, all day, every day? A couple of weeks ago I just stopped using it entirely. I didn't even make a decision to do it -- it sort of just happened. Today I finally scored a Google+ account. It's a better Facebook than Facebook, and I hope everyone agrees and moves there too.

    1. John70


      The problem I see Google+ is that it's another way to profile you to sell your soul to advertising. And all the info that is on Facebook is Google's wet dream to know everything about you.

  9. m0th

    You'd think...

    a $1 trillion company could put out a decent Android app that didn't get worse with every update.

  10. kevin biswas

    I will believe it when.......

    I suddenly have to start paying $5/user/month if my office has over 10 users like I do for google apps nowadays.

  11. Jay 3

    WTF is this facebook thing

    and why the hell do I need it. If I wanted to stay in touch with my classmates or previous co-workers I would have. Fuck off Facebook, your time is coming to an end and I think it will be sooner rather then later.

  12. Relgoshan


    Facebook usage is approaching decline in the US and western Europe, Facebook games are not mobile-friendly, their site has terrible browser/capability detection, the list goes on. By q1 2012 when they are due to release IPO, the company valuation may already be in decline. Kneel and apologise to the readers you have just trolled.

  13. scarshapedstar

    Maybe I'm getting old

    I was a freshman in college when Facebook appeared. You had to have a .edu address from one of a few dozen schools to register, and it was very student-oriented; its "killer app" was that you could list your class schedule and find your classmates for... uh... study sessions, yeah. There was no news feed and no FarmVille to fill it with crap. At one point I had the largest Daily Show fan group on the site, because you could stick a 0 in front of your group's name and bump it to the top of the list... heh. It was a fun community but actual online communication still overwhelmingly took place over AIM.

    Anyway, then the feeping creatures started to multiply, the useful stuff died (if it still does class schedules, I don't know where they went) and I lost interest approximately as quickly as my message box filled up with hundreds of daily requests to plant virtual seeds. And finally, around the time they opened the doors to grade schoolers and grandmas and corporations, the hardcore suckage began; suddenly you'd have innocent-looking "SuperPokes" popping up from friends, and when you tried to SuperPoke them back, you had to give SuperPoke the rights to your firstborn son. Every little goddamn thing anyone did spammed all of their friends' walls with a notice about their garden or whatever. The site was taken over by machines.

    So eventually they came up with the News Feed, which was meant to fix the horrendous signal-to-noise ratio by prioritizing, you know, stuff that your friends were actually sharing with you instead of some app. And I interact with that using a LauncherPro widget on Android. I don't use apps, I don't use groups, I don't see a single ad, much less click them. And it's an okay diversion. But from my perspective, Facebook died a long time ago. On the other hand, my perspective and a trillion dollars will let you buy out Facebook.

    So I'm excited about Google+. Whenever I start medical school, I think its group messaging stuff will be pretty popular. That said, I know that ads and Chrome web apps are coming, and I hope that it doesn't become unusable like Facebook did in its awkward teen phase.

    1. Anonymous Coward
      Anonymous Coward

      Re: Maybe I'm getting old

      What you've described could pretty much be applied to using the Internet in general. And thus the circle of life continues: something else which isn't spoiled by idiots and scammers rises from the ashes (arise Google+) to be dirtied and defiled until it too is of no further value.

      Try to create the ultimate "something for everyone" walled garden and experience the same fate!

  14. Anonymous Coward

    Facebook is worthless in its current form.

    I use FB on an iphone.

    How many ads to I see. NONE.

    What do FB make from me, NOTHING

    If they start charging for FB will I continue to use it? NO

    As we move more and more to mobile access (ie phones with small screens) there is less room for ads to be displayed. If I was an advertiser I would not pay to advertise on FB. You can do it for free by setting up a new user page as many of my friends have done for their own businesses.

    If your paying for ads to be displayed on FB your a FOOL.

    FB need to change their model and fast or they will become WORTLESS.

    Would I buy FB shares. HELL NO.

    History tells us their FATE.

    1. Ken Hagan Gold badge

      Re: worthless in its current form

      "If I was an advertiser I would not pay to advertise on FB"

      If I was an advertiser, I don't think I'd pay for any internet advertising.

      How many TV or magazine adverts can you remember from your childhood? Quite a few. How many internet ads can you remember from this year? Hardly any. It just doesn't have the impact, even for those who aren't using ad blockers.

      Your ad is always "somewhere off to the side" and if it wasn't then your audience would spend more time finding out how to block it. Unlike old-fashioned TVs, the target audience has some control over the viewing platform. Interestingly, this is also true of new-fangled TVs and TV advertising revenues peaked a long time ago everyone knows that everyone else records the program and fast-forwards through the ads.

      Only Google really make it pay and that's because they are offering something qualitatively different from everyone else. Paying to have your company appear in somebody's search results is not advertising. Your viewers have self-selected for actually being interested in the "ad".

      1. Synonymous Howard

        Its only when you turn off the ad blockers..

        that you realize just how crap, intrusive and down-right awful t'internet ads really are.

        AdBlock Plus is the biz.

        1. Anonymous Coward
          Big Brother

          crap, intrusive and down-right awful t'internet ads

          I dont bother with Adblock. I find internet Ads about intrusive as a poster on a bus shelter - I dont notice them. But they do provide income for websites - without Ads, how do you think they would generate income?

  15. jake Silver badge

    Both are overvalued, to the extreme.

    Neither actually have a sustainable product, and both have huge overhead.

    Once the principles start cashing out, the market will correct itself.

    Holland, tulips, etc.

    1. Adam Foxton

      Don't know about that

      Facebook yeah- they don't do anything other than sit there creaming off developers. Well, off Zygna. No-one else makes enough money to be bothered with. Advertisers, too, are a source of income- but they're pushed to one side of the page and don't appear at all on the mobile version so that's not a sustainable solution.

      Google, on the other hand, has a mobile phone platform (soon to be joined by another- Chromium), more processing power than God, their own (surprisingly good for most uses) office suite, their own (popular) web browser, /paying customers/, links to governments and major arty and engineery organisations around the world and is used several times in a day-potentially several times a minute- by people around the world. They even have their own fibre infrastructure carrying data across the planet.

    2. A handle is required

      @jake: Troll fail

      So you wouldn't count any of the products here as sustainable?:

      1. jake Silver badge

        @A handle is required

        I'm not trolling, I'm a realist. NONE of the crap on that link can't be done here at home, easier, cheaper, and with a better eye on our family's security.

        Stop sipping the goolade.

        1. A handle is required

          Well then,

          I'd love to see your first crack at any of them.

          1. jake Silver badge

            @A handle is required

            I tried to answer your "first crack" question, but apparently one of the mods has issues with my background. ::shrugs::

            1. A handle is required


              No problem. Agree to disagree?

              1. jake Silver badge

                @A handle is required

                I can always agree to disagree. The techie world is what it is :-)


                Attempt to post my first reply follows ... maybe ;-)

              2. jake Silver badge

                @A handle is required

                *MY* first crack at that kind of shit?

                Gawd/ess, where would I start ... Personally, probably the BBS I ran in the late 1970s. Prior to that, I was active in the early NCP version of what we now call "The Internet". During and after that, I was active in the development of TCP/IP. Before, during & after TCP/IP I was active in development of UUCP, NNTP and (S)MTP ...

                I was at the wrong place (S.F Bay Area) at the right time (student). ::shrugs::

                More beer ... and I almost never use icons ...

                1. A handle is required

                  Impressive, but...

                  None of these things are analogous to what Google have created.

                  1. jake Silver badge

                    @A handle is required

                    Not impressive. Wrong place, wrong time. I was a small cog in a world-wide machine that was experimenting with connectivity (ever hear of "Community Memory"? I participated).

                    Disagree on "not analogous".

                    Google has, in a nutshell, re-created the BBSes of the '70s and Fidonet of the '80s, and the "Portals" of the '90s (throw Usenet in there, just because) ... and commercialized them on the backs of their userbase ... the very concept of which was always an anathema to those of us figuring out this technology in the later third of the 20th century.

                    I'm fairly certain that without all us small cogs, google wouldn't exist as it is today.

                    Giants on the shoulders of midgets, to coin a phrase ...

  16. cloudgazer

    It's all about the adverts

    Google has a platform that is perfect for the delivery of adverts. If I'm searching for something then it's entirely plausible that I might want to buy something, and if I do the adverts will be relevant. So when Google serves me an ad it's both less likely to annoy me than Facebook, and more likely to result in a sale.

    Facebook has millions of eyeballs, but unless it can use it's dominance of social to take search it won't be able to monetize them, because adverts in facebook are more annoying, less relevant, and less likely to find me in a buying mood.

  17. Andrew Jones 2
    Thumb Down

    this is a title

    Google+ has been in existence to the normal folk for little over a week.

    It's already got roughly 900,000 - 1.2million users depending on how ultra accurate you are with your search terms.

    While there are no official figures as such - I have made more friends on G+ in the last 5 days than I have in 3 years on Facebook.

    Additionally - I *actually* enjoy talking to the new people I don't really know on Google+ whereas I use Facebook as a business tool these days more than anything.

    Once I discovered however that Facebook strips all the EXIF data off the photos that you upload to their service - meaning every photo I have uploaded since 2006 to the service has no DateTaken info attached to it - I decided enough was enough and will only be maintaining my "pages" on Facebook now - I can't be arsed updating my personal stuff.

    Google+ on the other hand is a joy to use with a slight downside in that it's incredibly addictive and people are finding it hard to switch it off.

    1. Mike Flugennock


      Huh. Evil+, more like.

      "Google+ on the other hand is a joy to use with a slight downside in that it's incredibly addictive and people are finding it hard to switch it off."

      Yeah, kinda like heroin.

  18. Stenetoppen

    facebook is not about facebook, it is about a book of faces (que theremin)

    I don't think the point of facebook has to do with the 'social' interaction. That is the crispy coating on what FB is really going after, namely to become the dominant hub of digital ID's on the web.

    Case in point: I can log on to the Register using my FB account.

    With the current appification of the web, the storing, enabling, leveraging digital ID's is the prize being fought over and is also why Google + is such a threat to FB.

    But back to TFA: is FB worth 1 Trillion? Nope; is it worth a lot? If they can consolidate their hold on ID's: yes. If users move to Google + and other contenders AND (have to) take their ID's with them then no. Too early to tell methinks.

  19. JDX Gold badge

    re:Facebook is too well established to go anywhere now

    Remember MySpace? Altavista? FriendsReunited? All were household names, all collapsed as users switched to Google and FaceBook.

    FaceBook might seem to big to die out, and it would be a big upset, but it does happen.

  20. Destroy All Monsters Silver badge

    An Open Letter to President Obama

    1) Seize Facebook using Executive Prerogative or some similar Nazi B.S. If needed, Mr. Koh can finagle a justification.

    2) Sell at 1'000'000'000'000 USD (1 TRILLION US DOLLAR)

    3) ???

    4) Reduce national debt by 1/14! (or have the cash ready for next year's military expenditures)

  21. John Smith 19 Gold badge

    That gives a Price/Earnings ratio of c 3333 to 1.

    Now obviously the price figure is just what a *current* FB stockholder would *like* it to be.

    And the earnings figure is leaked by someone who'd like to talk FB (expected) stock price down.

    P/E ratio says if you bought this stock and the company dished out *all* its earnings (and presumably kept on doing so) how long would it take to get what you paid for the stock (assuming the earnings stay the same) back.

    In this case about 3 1/2 Millenia.

    Of course if profits are 10x bigger and opening price is 10x smaller that's a P/E of 33 years.

    If you can get in early talk the price up *higher* and offload your shares not a bad deal (not quite as good as that of the founders of course).

    But an actual sensible *investment*?

  22. PostmanPat

    This author is an amazing troll!

    ..or just fucking stupid.

    1. Anonymous Coward
      Anonymous Coward


      Pretty sure it's the latter taking the previous articles into account

      1. tmTM

        Has el Reg

        Hired all of the morons recently booted out of NoW??

  23. Stewart Cunningham

    Usage data badly skewed

    It's very common for folks who play Zynga games to have at least a dozen facebook accounts each. This is in order to progress in the game without badgering real friends or spending money. proper facebook gamers have up to 80.

    Each account requires an obscene number of full 'page views' in order to respond to fake friend requests. These folks are amongst the heaviest users and appear to be in large numbers.

    I'm sure you've all seen other apps that are desperate for you and all your friends to join and waste as much time as possible for little gain.

    While there is no doubt these people need taken out back and shot, it suggests you'd have to be nuts to invest with such wishy washy figures. How about quoting the number of facebook users active at a time and their ad click rate? Just a hunch but my guess is its potential far below its current valuation.

  24. Jeff 11

    Go high with the the Facebook Balloon...

    I'm looking forward to the day it pops. So too, I think, is everyone overvaluing a company which simply cannot create profit to justify that valuation. These valuations are all based on the most optimistic hot air I've ever seen (such as this article), not levels of investment or a proven business model: a $1tn valuation on a $1bn sales figure would be a pathetic investment. Facebook is only worth as much as Google when Facebook's ads are equally prolific.

    The reality is Facebook's ads exist only on Facebook, and Facebook has no profile at all outside Europe and the English-speaking territories. Google, on the other hand...

  25. Bernard

    This title bar bugs me.

    So it's "beyond doubt" that Facebook is worth more because "its potential is arguably bigger"?

    Bubbles come and bubbles go, but it's profit which determines a company's long-term stable value. Annoying though it's model is, Google's long-term stable profitability looks pretty sound at this stage. Facebook's is still very much open to question.

    When I see how much obviously bright tech gurus think they know about company valuation I can fully understand why the dot com bubble happened in the first place.

  26. Anonymous Coward
    Anonymous Coward

    Once upon a time in AOL Europe...

    ...we stood around in "strategy meetings" discussing exponential growth rates and how different values of €/user would make the difference between a Porsche and a Ferrari when the IPO came. And here I am all these years later, still driving a Citroen.

    There seems to be a fundamental human drive to believe in fantastic things, but sooner or later the smoke runs out and the mirrors crack.

    Facebook is an unremarkable web app with a large number of very fickle users who pay nothing.

    Comparisons with Google are ridiculous. I imagine the only reason that Google hasn't built a better Facebook is that it's populated with engineers who share the same pitiful scorn towards Facebook users as every other engineer I've met, and so they can't be bothered.

  27. jonathanb Silver badge

    But what type of users?

    A lot of people who go to google are going there to look for ads, so the potential for ad revenue is that much greater than with facebook where they are going to chat with their friends.

  28. Charlie Clark Silver badge

    What a load of trollfodder

    Matt, have you ever heard of the PE ratio? How about the Robert Shiller PE 10?* A PE of 20 is already above the historical average and you are suggesting a PE of over 1000.

    All pre-IPO stocks are overvalued at the moment as with nearly zero interest rates there are lots of freshly printed dollars chasing returns. But valuations are not values which is why such trends are called bubbles.


    1. Anonymous Coward
      Anonymous Coward

      "Matt, have you ever heard of the PE ratio?"

      guess not, think he is relying on other economic measures such as swivel-eyed fanboyism and "way-to-go!!" quotients.

  29. heyrick Silver badge

    Just my tuppence worth

    From a friendly search to a useful map system, which works on both mobile and computer, plus can be a gps route tool in its mobile form, I use Google daily. In fact, I don't think there has been a day I've not Googled something.

    I used Facebook a few times when people from work invited me to be a "friend". The spam ratio is horrendous. I've not been on FB in over a month, maybe more.

    In short, in my life, I need Google. I have no need for Facebook...

  30. Anonymous Coward
    Thumb Down

    It's the dot con bust all over again

    There are a lot of facebook users who don't click on ads (or block them) and don't use the crappy apps (I'm one of them) - they won't be able to monetize them at all.

  31. Anonymous Coward
    Anonymous Coward

    FB is how kids communicate...

    ...hence the valuations. It's not about FB's current advertising revenue, or how they don't happen own *your* ass, or how few of *your* friends post.

    It's about a couple of generations, a lot younger than you, having FB as their "digital ID's on the web" (as one poster said).

    It's about 14-21-y-o's spending a couple of hours, on average, on FB, each day. (They truly do. They don't go down the park for a kickaround anymore, folks.)

    I appreciate that those of you who have procreated provide uber-tech-guidance to your teens. Meantime the rest of the world, the 90% of normal people, continue on, with all their kids living through FB.

    - True, something could conceivably come along that makes all these happy teens jump ship. Good luck designing that.

    - True, youngsters spend an inordinate amount of time sharing and showing off, and that diminishes through adulthood. Yes.

    FB's domination is not guaranteed. But it could very easily become 90% of "the internet experience" for several generations of younger (non-techie) people.

    Hence the valuations. (I think it sucks, personally, but that's of no relevance.)

    1. DavCrav

      Just one small problem

      Kids have no money. So what are they buying for Facebook to be worth $1tn?

    2. Ken Hagan Gold badge

      Re: kids

      "- True, something could conceivably come along that makes all these happy teens jump ship. Good luck designing that."

      Er, I think it is called "life" and it doesn't need designing. It will just happen once these kids grow up. Oh, and you can't monetize it, so don't waste time trying.

      I'm not pretending to be superior to these people. Looking back, I wasted a horrific amount of time in my childhood. But I grew up. Other things seemed more interesting or more urgent. The same will happen to current FB users. And to echo someone else's remarks, just at the point where these people start to have their own money, they'll start to drift away from FB.

  32. ray hartman

    a brand of acne medicine ?

    Facebook .. is that a brand of acne medicine for readers ?

  33. Anonymous Coward

    One glaring omission.

    The author hasn't declared whether he owns or plans on purchasing any facebook shares or not.

    Considering the obvious facebook hype I think it's something he should have mentioned.

    Why do you keep rejecting this comment? As if I couldn't guess.

    1. Anonymous Coward
      Anonymous Coward

      Re: One glaring omission.

      OK, you want a serious answer?

      The only outsiders who own shares in FB are gazillionaires.

      Discussion of the valuation of FB could not be construed as share ramping - the company is privately held and there are no plans published for an IPO.

      Lastly, I refer you to 6+7 of comment guidelines.

      1. Daniel 4

        Oh, how far El Reg has fallen! *swoon*

        Drewc: Ok, I agree I with very nearly all of your points in this forum post (not the article, mind you, but that's irrelevant to this post). But what I want to know is this:

        When did the Register develop a thin skin about being referred to as company shills, etc.? I still remember the days when the standard response to such an accusation was to refer people to the "price sheet" for favorable articles, snickering the whole time...


        Joke alert because this /is/ meant to be funny, but it could just as easily be a sad frown for the lost "good old days."

      2. Anonymous Coward
        Anonymous Coward

        That wasn't an answer.

        If he plans on buying shares (should they become available) then this article is nothing more than wishfuil thinking.

        If not then ihe's a blatant troll.

  34. Antony Riley

    Trolling the commentards?

    Either that or it's April 1st in whatever part of the universe the author is from.

  35. Dunstan Vavasour


    I was going to +1 this article, but there isn't a button, only a legacy "like" button

    Come on Reg, get with the programme. This isn't 2010 you know.

  36. John Smith 19 Gold badge

    Always remeber that FB *customers" are its advertisers

    It's real *product* are the people who have accounts on it.

    I'm sort of hoping that some massive data breach will happen and the kiddies will go "But, but I thought Facebook was my *friend* and didn't do bad stuff like spying on me and stuff."

    And they all migrate to Google's version, like good little Eloi should.


    That is all.

  37. Anonymous Coward
    Anonymous Coward

    one trick pony

    FB is a site where people with too much time on their hands post a few photos and comments to try to make their friends think their lives are more interesting than they are. It's a slickly designed site, and has some nice tech, but in the end it's a place for a certain section of the population to hang out. Starbucks if you will.

    But Google has much more. Everyone uses Google search. And that business is lucrative because you've got people looking for things, and advertisers of those things will pay to be there. And they've got a fantastic mail offering. And online document systems which could well be the future direction things go. They're ensuring they're in front of people on mobile devices and the desktop with strategic investments in Android and the Chrome browser. And they own YouTube which could well corner the TV market in the future. They are Wallmart and Tesco's rolled into one and they have branched into various directions that all look promising whereas FB is just focusing on social networking.

  38. SilverWave

    Bubble (Your other opinions now equal suspect).

    Take a day off.

    You need to get some perspective.

  39. John Owens

    It's not just a website

    It's a resource that holds data about practically everyone which can be used by marketers to market to them effectively. They don't even need to do it via traditional banner ads but it can include incentives i.e. anything from getting free credits in a game if you "suggest" it to 10 friends etc. or many other forms of marketing which is much more cost effective too.

    Infact using this model the user doesn't even have to be on the Facebook website but simply using an application/game that has uses the Facebook APIs.

    This is where mobile games is heading (which I work in) and some of the valuations (Plus+/Ngmoco : 400m) for small social networks where also ridiculous but if that's what they where bought for then Facebook with it's potential it many magnitudes bigger and covers everything.

    There's a real land grab going on at the moment but the problem is Facebook has already grabbed it all, and as Sean Parker said. To get someone to change their social network doesn't just require them but most of their friends and their friends etc. Once the masses started using it the game was over.

    Personally I think a lot of these valuations going around are a joke but don't be surprised if Facebook isn't one of them.

  40. Richard 33


    What an utter load of drivel. I suggest Matt Asay buys a book about valuing companies, available at just about any high street bookshop.

  41. shade82000

    They won't do it...

    Please float your company.

    Then you will have to publicly disclose your value, people will wake up and realise that there is not as much up for grabs as they thought, they will turn their back on you one by one and you will fade away as quickly as you came, another sad casualty of interwebs fashion oblivious to the lessons of the 90's.

    Or you can stay a private company, keep your value a secret, keep people hyped up because they think there will be free money up for grabs when you float, hype up your user data, people think they are missing out on something so they create an account, other companies integrate little facebook buttons into their sites and electronic devices beause they too want a piece of the potential IPO pie, so facebook grow a bit more and hype the figures a bit more, get more users in etc etc.

    Staying private will mean quicker self-perpetuation, a higher peak and a longer life for facebook, so please go public.

    It would be funny watching all those pissed off investors on the 2nd day of trading too.

    It will be Monday in a few hours and then we can all jump onto the next big thing...

  42. trarch

    Step back a bit

    I don't particularly like Facebook - I have an account that I log into once every few months just to have a quick look at what old friends are getting up to, but that's it.

    That being said, I feel some are being a little harsh in the way they are expressing their opinion of the author for this article. It was not the author suggesting a $1tn valuation, rather citing a WSJ interview article regarding valuations and the 'tech bubble'.

    One cannot rule out entirely that Facebook will not be as successful as Google in terms of revenue and worth, however personally I don't see it. Then again, if I could, I would probably be raking in the cash myself working for them.

    My gut feeling, though, is that eventually Facebook will be superceded by the next best thing, whatever that may be.

  43. Anonymous Coward

    How many people have several FB id's ?

    I can't be the only one to have more than 1 FB account? Last time I checked, I had 5 FB identies. Work, family & friends which should always be kept well apart - more so, if you're working for a shite company. The others are disposable and great for trolling.

    My daughter used to spend hours on the bloody thing, she's not been near FB for months and when she last checked, neither had a lot of her 'friends'.

    The author of this nonsense needs to learn there's no money in Socialism - unless your name is Blair.


    Airy Arse

  44. Yet Another Commentard

    $1 trillion?

    This makes no sense at all. There are no published accounts I can find for Facebook, but Wikipedia (may or may not be correct) gives it a $2bn income. Google has (same source) an $8bn PROFIT.

    Company valuation is difficult, that's the problem. As a user above notes P/E ratios are a good measure, we don't know Facebook's E though. Just assuming (wrongly) it converts all that income into earnings, $1Trillion would be a P/E of 500. If the user above stating a $300M profit is right, that jumps to an eye-watering 3,333 (as another notes). That's a bit meaningless, so let's look at Google's, which is about 14 (future) or 20 (trailing) per Yahoo Finance, which is very close to the mean of a traded company.

    At $1T value, and a half-sensible P/E ratio (say 20) it's "profit" of $50Bn PER YEAR. That's $8 for every man woman and child on the planet. Most of whom don't have that much to spend in total. It's 1.5 times ExxonMobil - a company with lots of assets and pretty much a product the world cannot function without.

    Still looking sensible at $1 trillion? Even at $75bn it's a P/E ratio of over 200. Feels wrong to me.

    When you look at Facebook's revenue - it's banner ads and games (I don't know how the latter works). It's click through rates are very poor compared to Google. That's key - I go on Google and search for "laptop" that's because I want a laptop. If I see "laptop" alongside my Facebook page (harvested from some data of mine) I may well ignore it.

    Facebook's user base may well be about as big as it gets, I think it has started to fall, even though Zuch has said he doesn't care (recent Reg article). Its demographic is, I understand, kids. Kids don't have much cash, even though they may click on ads. If you go subscription, they go too.

    The article says the success and value is due to it being open source, I think, I may have missed the point somewhere I was laughing so much at the valuation, and that had encouraged developers, which drives the value. Developers seem to help out at that famous open source outfit Apple (see the App store) and another one, say Microsoft.

    In short - it's not worth $1 trillion. It's not valuable because of open source.

    The value is jumped up by some self interested traders who have sunk billions into it, and want to get the cash back when (if) it IPOs. They must hope The Next Big Thing does not appear before that happens.

    1. John Smith 19 Gold badge

      @yet Another Commentard

      "Company valuation is difficult, that's the problem. As a user above notes P/E ratios are a good measure, we don't know Facebook's E though. Just assuming (wrongly) it converts all that income into earnings, $1Trillion would be a P/E of 500. If the user above stating a $300M profit is right, that jumps to an eye-watering 3,333 (as another notes). "

      I used the only figures I was aware of and stated all assumptions I am aware of in the process to demonstrate how crazy this valuation looks to me. I just went where the numbers lead me and had no idea of what constitutes a "realistic" P/E ratio. IRL a company's management which turned all its profit into earnings for it's stockholders (and kept on doing it) would be viewed as insane.

      "The value is jumped up by some self interested traders who have sunk billions into it, and want to get the cash back when (if) it IPOs. They must hope The Next Big Thing does not appear before that happens."

      Pretty much view of things.

  45. Anonymous Coward
    Anonymous Coward

    "Matt Asay is senior vice president of business development at Strobe"

    If I were on the board at Strobe I would be having serious worries about his judgement and suitability in the role of business development.

  46. MMcA

    Wrong about the 'first $1tn business'. It's happened at least twice already...

    Citigroup, 2002, PetroChina, 2007.

    First tech-based $1tn business will be a UK company that you probably haven't heard of yet.

  47. M. Burns Silver badge
    Thumb Up

    I'd pay $100 Trillion for Facebook!

    Here's my payment:

    1. John Smith 19 Gold badge

      @M. Burns

      Nice. The only note you will *ever* need to carry.

  48. Anonymous Coward

    Goldman Sachs Pump and Dump Scam

    Wake up an smell the coffee people

  49. Pieminator


    Cisco claimed to be the world's first trillion dollar company back in 2000! They even ran adverts on UK Tv!

  50. Levente Szileszky
    Thumb Down

    Good ol' lame, stupid pump-and-dump play by Wall St crooks... always, nothing else.

    My fav in this recent BS-train is Zynga, the king of junk copycat games running on FB - valued at $10B...!

    That means Activision + EA = Zynga - this unabashed copycat king, let by one of the most disgusting lowlifes of the thief industry, Pincus, is worth more than the two biggest game publishing giants, with ACTUAL games, with ACTUAL portfolios of ORIGINAL franchises.

    As I always say you have to really-really-really stupid to believe in this - or you have to have a good reason ($$$) to push this BS-train of IPOs.

    The bigger problem is when these unscrupulous, rotten crooks of Wall St, parasites of Government Sachs et al will once again pull out and the house of cards will suddenly come down and we will, once again, be forced to pick up the tabs why these scumbags will be planning the next heist.

    At the end it's going to hurt us, taxpayers, nobody else, mark my words.

  51. Anonymous Coward

    Pile of tosh

    Typical Matt Asay "article", with no basis in reality.

  52. Anonymous Coward
    Big Brother

    Once governments and the public realise Facebook is a US spynetwork

    I doubt Facebook's 'valuation' will stand up. Wait for the world wide banning orders after the news spreads that Facebook is being used to monitored anyone who opposes the USA/Israeli government.

  53. FrancisT

    Google+ will spike FB valuation at least

    I just started using Google+ this weekend. I prefer it to FB so far. No it isn't perfect but the circles concept looks like a winner and there's a bunch of other things to like in it. I expect google will implement integration with many other google services (e.g. reader) and the combo will almost certainly be better than FB. I have no loyalty to FB and will almost certainly leave when (if) enough of my FB contacts have moved across. So far about a quarter of my FB friends are on google plus. Most of them are saying the same

    If FB loses 25% of its userbase to google+ then that's going to put a hole in the valuation

  54. theloon

    End the madness!

    It's getting crazier all the time!

  55. El Scotto

    Ah, the amusement that comes from Op-Ed pieces...

    $1 Trillion? Really? I'm not sure Microsoft's peak value combined with Apple's could quite reach that figure. And this is one of the more poorly informed Op-Ed pieces I've seen in a while. Makes me feel like an expert for some of the commentary I've done on podcasts.

    Among other things, there is a developing watershed moment with social networking sites. In April alone, Facebook lost over 6 million users. They didn't even have Google+ to blame for it. They just up and left.

    And to claim Google as being a peer to Facebook is preposterous and entirely out of bounds. Facebook and Google+ do clearly compete. But, that's pretty much where the comparison stops. Past that, Facebook requires you have an external email address to create an account; Google GIVES you one. Facebook displays your geographical location with "check in" by way of Bing; Google made their own map and location system. The comparison braking could go on and on.

    While, Facebook is worth a large amount of money, it's very conditional. It is dependent upon subscriber uptake and retention. And within that, it's dependent upon those subscribers clicking ads. And a lot of us are using software to block ads and behavioural marketing tracking apps and the like. To that end, Facebook will continue to incrementally lose it's hypothetical value. And as that carries on, it will continue to lose real-world valuation.

    In the end, it is extraordinarily unlikely that Facebook has or ever will reach as high a value as the author of this article seems to think.

  56. Zap

    Carried Away

    So many people get carried away with Facebook and think up stupid numbers as you have done.

    Page views are meaningless, I can drive 50,000 people to a facebook page as easily as I can respond to this post.

    When will you people realise that what matters is PROFIT and multiples thereof, that is the value of a company or the potential therein.

    Facebook simple has a different way of trageting (by demographic) but Google gets you at the point of Interest when you are searching for something.

    People go on facebook to socialise, yes you can direct them away or use tabs as part of a viral strategy but the conversions vary.

    So yes Facebook is valuable, but right now it is still living on borrowed money, it took Google several years to monetise and without venture capital it would have failed, (it built all is own servers and as such was the biggest manufacturer of servers).

    Facebook can only hype up the potential price for so long, some think the sweet spot has passed.

  57. John Smith 19 Gold badge

    Generally this does look like it's shaping up to be time all over again.

    Capitalism without bankruptcy is like religion without hell.

    This time *let* the investment gamblers go to the wall.

    The last time round it was "Heads I pick up my unfeasibly large bonus, tails you bail me out."

    A lot of organisations will discover the assorted financial instruments (that's still going on. Different names, same principles, same lack of oversight) they paid so *much* money for are worth a lot less (might be a 10% loss, might be a 100% loss. There's literally *no* way to know).

    Will this affect the *real* economy? Will these losses have *any* more value than the Zimbabwe Trillion dollar note?

  58. TeeCee Gold badge

    Let's look at it in simple terms.

    Company A's business has an insatiable appetite for huge amounts of hideously expensive bleedin' edge hardware and makes a shitload of hard cash from flogging advertising.

    Company B's business has an insatiable appetite for huge amounts of hideously expensive bleedin' edge hardware and makes a shitload of hype from page views.

    Which one is most likely to have its arse on a chair when the music stops.......?

  59. clean_state

    fad-based business

    The author forgot that Facebook's business is entirely based on fashion. While Facebook remains fashionable, it has users and ad revenue. When it is not fashionable anymore, it dies.

    There is nothing in the Facebook proposition that will keep users around, once the hype is gone.

    Friends ? I have friends, real ones at that, and I do not need facebook to keep in touch.

    Games ? Real games in 3D are better and do not need facebook either.

    Communications ? Well email and Skype work quite well, thank you.

    So if I was to bet on the 2020 Facebook valuation, I put my chip on $0 rather than $1T

  60. Tatsky

    Can't compare google and facebook

    From my personal experience (so user base of 1) if I want to find something, or buy something, I use Google. If there is an ad which seems relevant to what I want to buy/find I will click the ad. That generates some revenue for Google.

    This happens quite a lot.

    I use Facebook once in a blue moon to see what friends are up to. I never look at the ads, and have never clicked on one that's for sure.

    At work, we tried facebook ads. The click through was poor. Loads of impressions, half a dozen clicks. You could argue it was the ad, but on google ads we had a good click through rate, and good conversion. We would never use Facebook ads again, we would use Google ads again.

    If I could go to facebook, and search for products or services, and then see reviews of those products or services from my friends, that may be attractive. That way, I may click to buy, and so generate revenue for Facebook.

    So I just cannot see how Facebook can generate the revenue to command this valuation. Google has monetised their platform well. Facebook is a long way of monetising theirs, and I don't know if they ever can effectively.

    Put it this way, If I was down the pub talking to my mates, I don't want someone whoring their goods and getting in the way.

  61. Code Monkey

    Is Facebook worth more than Google?

    Long term Facebook is worth about the same as MySpace.

  62. tonysmith

    one trillibillion

    "leading some to speculate that Facebook could be the first company valued at over $1tb."


    what's that stand for - one trillibillion dollars? that sounds like an awfully large number.

  63. GazElm


    If facebook disappeared tomorrow, I wouldn't bat an eyelid.

    If google disappeared tomorrow, the internet would be as painful as it was in 1999 again. Anyone remember how much better google search was than everything else?

    And no, bing is not good enough.

  64. Dave 15

    Facebook value

    Near zero I would say.

    What assets? A few crumy servers and some data it would be illegal to use

    What profit? 1 billion a year, Microsoft 6billion a quarter, Intel 11 billon a year

    What products? A fickle website that next week could be out of fashion and not used, nothing concrete that anyone needs.

    The idea that anyone would place a large value on this is laughable. The profit surprised me I have to admit, thats a lot of advertising - and given that level of advertising people will soon be getting sick of the site, at that point no one needs it, theres nothing compeling, it will be finished.

  65. Anonymous Coward
    Anonymous Coward

    how quick would value disappear

    I use Facebook a lot. I use it to keep in touch with a set of 10 or so friends in the UK whilst I live abroad.

    If a Facebook-like service was to be offered by 10 major charities, with profits after costs going to good causes, how many people would talk to their ACTIVE friends and move site. I use FB cos my friends use it. If they move, I'll move.

    Could a charity do this, not themselves but how hard would it to be to find a competent organisation to do it. Engineers in open source working to help the third world using a distributed architecture, with servers being sponsored by major corporations.....

  66. FuzzyTheBear
    Black Helicopters

    Today 1 tomorrow ?

    All it takes is one major scandal . Facebook can be bye bye easy.

    Worth ? imho .. way , i mean WAY over it's true worth atm.

    I'd start to watch what " they " do with their shares.

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