The Internet world certainly knows that Microsoft made a significant investment in Facebook this week.

Ironically, The Economist magazine recently had a headline on its cover entitled "Some Doubts About Facebook." A reading of the article is worthwhile.

I have expressed my doubts about the social networking craze and the corresponding valuations for businesses like Facebook. This article adds energy to my philosophy. The article concludes that social networking sites are important but that no social networking site "can have it all." In other words the more horizontal a social network like Facebook becomes, the less valuable it is. And that vertical social network site such as aSmallWorld which is an exclusive (or vertical) social networking site might be performing a more valuable service than a huge horizontal model such as Facebook.

Social networking is here to stay. But the longtime winners in this space could very well be the vertical plays. In the meantime, congratulations to Facebook for garnering a terrific investment and valuation.