UPDATE 2-Facebook buys social media start-up FriendFeed

Mon Aug 10, 2009 6:42pm EDT

* No price disclosed for FriendFeed purchase

* FriendFeed to operate as is for time being

* Facebook more interested in talent than product -analyst (Adds comments from FriendFeed founder, analyst, background)

By Alexei Oreskovic

SAN FRANCISCO, Aug 10 (Reuters) - Facebook, the world's largest social networking site, said it will buy FriendFeed, netting a group of prized ex-Google engineers in the fast-growing Internet business.

FriendFeed, an up-and-coming social media startup, lets people share content online in real time across various social networks and blogs.

The service is similar to, though less popular than Twitter, the microblogging site that Facebook tried to buy for $500 million in 2008, according to sources familiar with the matter.

Terms of the deal were not disclosed on Monday, but Facebook said FriendFeed would operate as it has for the time being as the teams determine long-term plans.

Facebook's big gain in the acquisition is the engineering talent at FriendFeed, rather than the actual product, which has won critical praise, but lagged in popularity compared to Twitter, said Forrester Research analyst Jeremiah Owyang.

"These guys now how to build scalable, social applications," said Owyang.

In a statement, Facebook CEO Mark Zuckerberg said he admired the FriendFeed team for having created a service he described as simple and elegant.

"As this shows, our culture continues to make Facebook a place where the best engineers come to build things quickly that lots of people will use," said Zuckerberg.

FriendFeed's four founders are former Google Inc (GOOG.O) employees who count well known products like Gmail and Google Maps among their accomplishments.

Facebook said the founders will hold senior roles on its engineering and product teams.

FriendFeed had talked with Facebook "casually" for a couple of months, and that it became clear that the teams were "cut from the same cloths," FriendFeed co-founder Bret Taylor told Reuters in an interview.

He declined to say whether FriendFeed had been in talks with other companies.

One bridge between Facebook and FriendFeed might have been Matt Cohler, Facebook's former management vice president. He joined FriendFeed backer Benchmark Capital last year.

Asked what role the connection played in the deal, FriendFeed's Taylor said the decision to be acquired by Facebook was made entirely by the team at FriendFeed.

Facebook has more than 250 million registered users. In May, the social networking company announced a $200 million investment from Russian investor Digital Sky Technologies that pegged the value of its preferred shares at $10 billion.

Facebook has said its revenue is on track to rise 70 percent this year, and board member Mark Andreessen has said the company will bring in more than $500 million in revenue in 2009.

But Forrester's Owyang said that Facebook must make the content generated within the site more accessible to the public instead of only to closed networks of Facebook friends, so that the company can sell more ads.

Earlier this year, Facebook announced changes to its privacy controls to allow people to make their status messages and posts viewable to a broader Internet audience. (Reporting by Alexei Oreskovic; Editing Bernard Orr and Robert MacMillan)

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