Facebook challenges MySpace for your online friends

"I've added you as a friend on Facebook..." This plaintive introduction to the web's fastest growing social phenomenon has been appearing with growing frequency in e-mail inboxes across the world as what started life as a way for American college friends to stay in touch has become one of the Internet's hottest properties.

The rise of Facebook, created by Harvard drop-out Mark Zuckerberg three years ago, is challenging the dominance of web leader MySpace in the social networking market.

Net services giant Yahoo! saw the potential for Facebook when it tried to buy the business last year. After an initial $1 billion offer was rejected out of hand by Zuckerberg, Yahoo! said it could raise that to $1.6 billion - but he made it plain that he had no desire to bail out just yet. At the time, many Internet watchers scoffed at the youthful "frat nerd" for not cashing in his chips, but today analysts reckon the business could be worth several times what Yahoo! initially contemplated.