Microsoft Buys Into Facebook

An unlikely and expensive union.

Along with YouTube, Facebook is clearly the mass market web phenomenon of 2007 and sooner or later one of the big boys was going to get involved…

Both Google and Microsoft have been circling the social networking site for some time now and it is the latter which has finally taken the plunge coughing up an incredible $240m for just a 1.6 per cent stake. This astronomical figure means the site now has a staggering $15bn valuation and shows that the old Dot Com Fever is well and truly back.

1.6 per cent of course doesn’t buy Microsoft a lot of sway with the core development of Facebook itself but it does – vitally – secure the software giant exclusive third party advertising around the world.

Dubbed a ‘Strategic Alliance’, Facebook’s Chief Revenue Officer Owen Van Natta said of the deal “We are pleased to take our Microsoft partnership to the next level. This relationship will allow Facebook to continue to innovate and grow as a technology company, as well as bring relevant advertising to Facebook’s nearly 50 million active users.”

Ultimately, it is well known that Microsoft is desperate to increase its presence in the online advertising space (its exorbitant purchase of aQuantive for $40bn in August is proof alone of that) but such is the fee paid for a tiny share in Facebook that I can’t help but wonder if this is partly to scare off potential rivals from similar investment.

Either way, Microsoft is going to need to see some return on these incredible outlays sooner or later and for Facebook there’s nothing like being in the right place at the right time…

Press Release