The World’s two largest Social Media companies Facebook and MySpace are in talks. The news broke out when Sheryl Sandberg, Facebook’s chief operating officer, told The Telegraph that the company is in talks with MySpace about a potential content partnership deal.

Wow! This was simple unthinkable before few months but now it has become a reality. Call this a Google effect or Twitter effect; or it might even be a market consolidation move by Facebook to dominate the World Wide Web through the Social Media. The development is simply amazing, and the result of these talks will give a new direction to the Web.

What Facebook says:

Facebook’s chief operating officer, told The Telegraph: “Facebook is focussing on building the best technology which helps people share content, while at MySpace they are focussing on more a content-led strategy. We would like to have their content, as we already do with many other sites, shared across our network because it is good for our users.

“We are open to working with MySpace and are in talks with them at the moment. Owen (Van Natta, MySpace’s chief executive) used to work at Facebook and we are still very close to him.”

When asked how the partnership could work, Ms Sandberg explained: “Hypothetically speaking, as nothing has been formally arranged yet, MySpace could become a Facebook Connect partner – which would allow people to share content they liked from MySpace with their Facebook network.”

What MySpace Says:

Owen Van Natta, MySpace’s chief executive, formerly Facebook’s chief revenue officer, also confirmed the two companies are in talks. Since joining the company in April earlier this year, Mr Van Natta has refocused MySpace, moving it away from being a social networking platform which directly rivals Facebook.

He says the product is now “a platform where people socialise around content” and is aiming for MySpace to become the place where people find and share music, TV, films and games.

GT Analysis

Facebook and MySpace coming together is no surprising considering the current context. Twitter is growing, and both Tech Leaders Microsoft and Google seems to fuel its growth to stop Facebook from dominating the Social Media. The Micro-blogging giant has made the Social Search deal for its content with both of these rival companies.

Both Facebook and MySpace understands their position well, and if only all Twitter uses come to Web (and not desktop apps like TweetDeck, Buzzom Desktop) Twitter is much bigger company that the Website rankings of Alexa, Compete say. More to that Analysts believe that more than 50% of Twitter use is through Mobile Phones, and majority of people using Twitter in Mobiles use it through Mobile Apps and not thro Mobile Browsers. Considering all these, Twitter has been a real trouble for Facebook and the pain can only grow from here.

On the other side, MySpace has been losing its users in a fast rate and most of this attrition is happening due to Facebook. The bigger rival taking away its users, and MySpace is left with just the Music Content Social Network. This too is losing the MySpace grip after all other Networks — Orkut, Hi5 and Facebook brought this feature lately.

I would blame MySpace for what happened to the company. Its site just looks too dull and not appealing. It has not changed even though its users have changed. This is self destructive.

Facebook on the other hand has been more proactive. I rate it even above Google in terms of understanding the market and acting; even in technical terms Facebook is comparable or better than Microsoft and Google. It has nothing to panic when its growth rate is better than Twitter in Web. The step is more for Web Dominance than threat of losing.

Things are getting interesting. Facebook’s Zuck has been the master of Social Media so far, and it will be interesting to see if he can limit the Twitter’s Stone in any way. MySpace is just history! I feel sorry for the company.