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Microsoft buys 1.6 percent stake in Facebook

updated 05:45 pm EDT, Wed October 24, 2007

MS invests in Facebook

Microsoft has purchased a 1.6 percent stake in Facebook for $240, pegging the four-year-old social networking site's value at $15 billion. As part of the deal, Microsoft will sell online ads for Facebook. The funding will help fuel Facebook's expansion plans prior to an expected initial public offering, which founder Mark Zuckerberg, 23, says he would like to put off for at least two more years. Facebook claims nearly 50 million active users, attracting 30.6 million U.S. visitors during September compared with 68.4 million for the other social networking giant, MySpace. The investment is the culmination of a feud between Google and Microsoft, who were both actively seeking to push capital into the young Internet firm.



Competing interest was spurred by Microsoft's intent to beat Google in the advertising space, the insiders explained. After Google declared its intent to buy web ad agency DoubleClick this year, Microsoft promptly responded by purchasing rival group aQuantive in an attempt to gain a similar level of clout. Facebook has reportedly developed its own ad system that would float context-sensitive ads based on a member's profile and habits. According to the Associated Press, in its fiscal year ending in June, Microsoft's online ad revenue rose 21 percent to $1.84 billion; over the same period, Google's ad revenue totaled $13.3 billion.

Google has refused to specifically comment on Facebook negotiations.



By Electronista Staff
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  1. just a poster

    Fresh-Faced Recruit

    Joined: Jun 2004

    0

    Sad news

    Am cancelling my facebook account immediately because I don't trust Microsoft.

  1. infobhan

    Fresh-Faced Recruit

    Joined: Jan 2003

    0

    $240?

    "Microsoft has purchased a 1.6 percent stake in Facebook for $240, pegging the four-year-old social networking site's value at $15 billion."

    I assume there's a multiplier missing there.

  1. robttwo

    Fresh-Faced Recruit

    Joined: Nov 2005

    0

    Faustian

    It starts oh so subtle, oh so slow. Then before you know, you've made the deal, and sold your soul to the devil.

    Facebook. Soon to be Face (the way we say your face should be) book

    Doofuses.

  1. legacyb4

    Mac Elite

    Joined: May 2001

    0

    Hopefully

    Microsoft is only investing and not intending to change Facebook otherwise you will see a quick departure of first wave adopters.

  1. jarod

    Fresh-Faced Recruit

    Joined: Apr 2005

    0

    Bye Bye

    What a bunch of idiots. Just when you think there's an intelligent person running Facebook; you get such a moronic action.

  1. cvbcvb

    Fresh-Faced Recruit

    Joined: Nov 2003

    0

    What?

    What’s a “Facebook”

    I seem to have overlooked this website...

    CVB

  1. Guest

    Fresh-Faced Recruit

    Joined: Nov 1999

    0

    There was Hotmail

    I wont be surprised if the same happens to Facebook as well. Microsoft takes it up, makes it all weird and strange.

    And we all have the option (again) to create another one. And the $240, needs some thinking.

  1. Feathers

    Grizzled Veteran

    Joined: Oct 1999

    0

    notional value...

    A clever move by Microsoft that places a notional and far from real value on Facebook that makes acquisition by others more problematic, financially and in terms of the fact that the well has now been poisoned by a minute quantity of M$ dollars. Bad, bad move by Facebook, guess they must have been desperate for hard cash which suggests the company is really worth far less than $15 billion (or whatever). Considering how deep M$ pockets are (having blown almost $5 billion to date on Xbox strategy), this amount of money is a joke that must have Bill & Steve (Ballmer) laughing out loud. Mark Zuckerberg has shown himself to be anything but a smart businessman, a seriously ironic loss of face!

  1. Clive

    Mac Enthusiast

    Joined: Jan 2001

    0

    USD:240 million

    Must be USD:240 million, right? That's 1.6% of USD:15 billion.

  1. apple4ever

    Fresh-Faced Recruit

    Joined: Jan 2001

    0

    c***

    Yeah, if hotmail is any indication, facebook will go all crappy and weird.

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