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The volatility of social networks was exemplified in 2006 when Connecticut Attorney General Richard Blumenthal launched an investigation into children's exposure to pornography on Myspace; the resulting media frenzy and Myspace's inability to build an effective spam filter gave the site a reputation as a "vortex of perversion".Around that time, specialized social media companies such as Twitter formed and began targeting Myspace users, while Facebook rolled out communication tools which were seen as safe in comparison to Myspace.

In February 2005, De Wolfe held talks with Mark Zuckerberg over acquiring Facebook but De Wolfe rejected Zuckerberg's million asking price.We went with a lot of products that were shallow and not the best products in the world".The products division had introduced many features (communication tools such as instant messaging, a classifieds program, a video player, a music player, a virtual karaoke machine, a self-serve advertising platform, profile-editing tools, security systems, privacy filters, and Myspace book lists, among others).While Facebook focused on creating a platform that allowed outside developers to build new applications, Myspace built everything in-house.Shawn Gold, Myspace's former head of marketing and content, said "Myspace went too wide and not deep enough in its product development.That deal required Myspace to place even more ads on its already heavily advertised space, which made the site slow, more difficult to use, and less flexible.

Myspace could not experiment with its own site without forfeiting revenue, while rival Facebook was rolling out a new clean site design.

Myspace is a social networking website offering an interactive, user-submitted network of friends, personal profiles, blogs, groups, photos, music, and videos. In August 2003, several e Universe employees with Friendster accounts saw potential in its social networking features.

The group decided to mimic the more popular features of the website.

Freston's successor as CEO, Philippe Dauman, was quoted as saying "never, ever let another competitor beat us to the trophy".

Redstone told interviewer Charlie Rose that losing My Space had been "humiliating", adding, "My Space was sitting there for the taking for 0 million" (Myspace was sold in 2012 by News Corp for million.) On November 1, 2007, Myspace and Bebo joined the Google-led Open Social alliance, which already included Friendster, Hi5, Linked In, Plaxo, Ning and Six Apart.

Some employees of Myspace, including De Wolfe and Berman, were able to purchase equity in the property before My Space and its parent company e Universe (now renamed Intermix Media) was bought.