Facebook Megabucks Update: Still With Their Thinking Caps On!

While there have been reports that Facebook will be picking investors by today, sources close to the company expect the mulling over to take a little while longer.

So, while it would be great theater, it is unlikely that Facebook founder and CEO Mark Zuckerberg will do more than the usual hemming and hawing on stage this afternoon at the Web 2.0 Summit in San Francisco.

That’s because there are two tracks going–which intersect a bit, but not completely. The first is to sign a commercial deal with either Microsoft, Google or Yahoo for the company’s international ad market.

The second is to rake in the dough in a megaround of investment, which would value the social-networking start-up at $15 billion.

“We’re getting responses and responses to responses,” said one Facebook source about both deals. “We’re obviously trying to get the best deal all around for the company.”

And that obviously means playing the top two bidders in the commercial deal–Microsoft and Google–against each other to Facebook’s advantage. Microsoft CEO Steve Ballmer is especially keen on besting the search giant, in a mania that Facebook execs find almost obsessive.

The funding deal is also complex and has, said another Facebook exec, “more moving parts than you can imagine.”

Oh, we can imagine. As I said in this post, beyond what I have written about the ridiculous $15 billion valuation Facebook is asking for, I will not evaluate the worth of the commercial deal especially, because of a particularly obvious personal conflict of interest related to Google in this case (click here to read more disclosure on the topic).

So you might click on over to Valleywag for an interesting recent take by Owen Thomas on the deal.

Here’s the money quote:

Why would Microsoft, Google and Yahoo be so willing to throw money at Facebook? Not, as some have suggested, simply because they’re desperate to get a foothold in social networking. These companies are not run by dummies. They want to learn from Facebook, it’s true–but they can take their learnings and run the results across their entire ad networks, improving their targeting. And they’ll also build up relationships with large advertisers. The long-term benefits will accrue to Facebook’s new minority investor, in other words. And Facebook? Once the deals expire, it will have to start from scratch.

If Zuckerberg’s smart, he’ll scatter all three term sheets to the wind.”

Please see this disclosure related to me and Google.

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