Microsoft Clinches Facebook Deal

Microsoft Corp., a company which needs no introduction, beat out rival Google Inc. on Wednesday in a battle to invest in socializing Web site Facebook, agreeing to pay $240 million for a roughly 1.6 percent stake in the Web phenomenon and expand a deal to sell advertising. Microsoft and Facebook stated that the $240 million investment valued Facebook at $15 billion, which analysts said was a steep price and a bet the young company would be able to transform itself into a hub for all sorts of Web activity. "The only way this works is if Facebook becomes sort of the users' operating system on the Internet -- everyone logs into Facebook every day to get in contact with their friends and use a multitude of future applications that will be developed for it," said Morningstar analyst Toan Tran.

Microsoft said it would be the exclusive third-party advertising platform for Facebook, which has more than 49 million Internet users. That extends a previous deal into Facebook sites outside the United States. Forrester Research analyst Charlene Li said that Microsoft was a better strategic fit for Facebook, since it knew how to work with software developers and build computing environments -- such as its Windows operating system. "Microsoft is a company that knows how to build platforms, knows how to develop relationships with developers. Microsoft developed the network that is the biggest, most vibrant one out there," she said. "Frankly, Google didn't bring as much to the deal."

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24 Comments

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1.6% it's not enough to "buy" a sit in the committee room.

I think that we are too near of a new dotcom crisis, for example 1 share of google give some sort of $10 but a share cost $600, so investing $600 just give $10 x year, a 1.6% annual or you could say, putting your money under the pillow.

Microsoft Corp., a company which needs no introduction

If it needs no introduction, then why mention that it doesn't need one?

That name sounds so corny, yet it's entirely possible. Seriously, MS really sucks when naming most of their services and products.

rm20010 said,
:laugh:

That name sounds so corny, yet it's entirely possible. Seriously, MS really sucks when naming most of their services and products.

You don't have to add the "Windows Live" part infront everytime you talk about one of the apps/services. Like Windows live Messanger, everyone just says messanger, or MSN still. Same for other things, the whole idea is that these apps/services are part of the Windows Live family.

Loxx said,
i'm waiting for those 'optimized for Internet Explorer' banners to appear.

Because, obviously, those appear in lots of places on the web?

1.6 % ?? WTF I thought they had at least 5% stake with 240mils. Facebook's value is way too inflated IMO.

so are so many of these other companies. Imagine how many developers you could hire for 240 million to produce something from scratch that solves any problems that the old site has.

Smigit said,
so are so many of these other companies. Imagine how many developers you could hire for 240 million to produce something from scratch that solves any problems that the old site has.

yes but you wouldn't have the very well known facebook name

Smigit said,
Sure, but you'd have more than 1.6% share in the project.

MS never wanted to buy it, they just wanted to get a deal to sell ads in and outside the US.

IF FAcebooks keeps growing and getting more users. The Ad revenue MS will make off of this deal will be way over $240million. In the end, MS will come out making a profit. And Facebook gets some nice updates/services or w/e.

good for facebook, for making millions off this deal, and also for microsoft. At least microsoft won't turn facebook into a crap shoot like google has done with myspace. that site needs a face lift, and a major spam blocker.

facebook FTW

RAID 0 said,
I could not agree more.

amen to that. if i see another invite to a GLAM party, i'll kick myself in the forehead. its stuff like that that makes me dislike myspace.

240 million is quite a bit to pay for a 1.6% stake in a company. Lets see how it goes for them. There seems to be a trend of over paying for net based sites and services. Ebay said they over payed for Skype and I'm pretty sure Google over spent on you tube.

"The only way this works is if Facebook becomes sort of the users' operating system on the Internet -- everyone logs into Facebook every day to get in contact with their friends and use a multitude of future applications that will be developed for it,"

This is exactly where it's going now.