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Microsoft beats Google for Facebook stake (Updated)

See updates and confirmation below.

Microsoft has won a financial stake in Facebook, reports CNet News.com's Ina Fried, citing an anonymous source familiar with the situation.

The Wall Street Journal, Bloomberg News and New York Post have been reporting today that the social-networking site was close to choosing between Google and Microsoft in bids for a minority stake and for Facebook's advertising business outside the United States. Microsoft already has an ad deal with Facebook in the U.S.

Update, 1:30 p.m.: The companies are confirming the deal, and they have scheduled a 2 p.m. conference call. From the news release:

Facebook and Microsoft Corp. today announced that Microsoft will take a $240 million equity stake in Facebook's next round of financing at a $15 billion valuation, and the companies will expand their existing advertising partnership. Under the expanded strategic alliance, Microsoft will be the exclusive third-party advertising platform partner for Facebook, and will begin to sell advertising for Facebook internationally in addition to the United States.

More to come.

Update, 3 p.m.: Notes from the conference call:

  • Kevin Johnson, president of Microsoft's Platforms and Services Division, on the $15 billion valuation: "If you look at this round of financing they're doing that we're in for $240 million, the fact that you look at just the run rate of users, and if you believe they have the opportunity to get to 200 million users, 300 million users, which we believe is certainly in the realm of possibility in the path that they're on, you can figure out when you think that might occur. You combine that number of users with the monetization opportunities and you can figure out a fairly modest average revenue per user per year, and you can very quickly get to these levels of valuations."

  • Johnson declined to talk specifically about the possibility of a deeper technological relationship with Facebook on a software development platform. However, he said, "You can sit back and watch how this partnership is going to develop. There's a lot more we're going to be doing together."

  • Owen Van Natta, Facebook's chief revenue officer, when asked about the choice of Microsoft over Google, didn't explicitly acknowledge the search giant's reported bid.

    However, he said, "We were very fortunate to have a lot of folks that were interested in partnering with us around advertising. We've been working with Microsoft for over a year now in the U.S., and it's a relationship that I think has been really great for both of us. ... It's a partnership that, six months into the partnership we decided to expand substantially in terms of the term of the relationship. Expanding that relationship beyond the U.S. borders to make it a global relationship was directly in line with all of those results."

  • Posted by at October 24, 2007 12:28 p.m.
    Categories: ,
    Comments
    #60105

    Posted by unregistered user at 10/24/07 12:56 p.m.

    Maybe Microsoft can now make facebook work as fantastic as the Vista OS.

    #60111

    Posted by unregistered user at 10/24/07 1:30 p.m.

    At least, by way of the bidding war, Google made MS pay a hefty sum for this. Now when is Google's social networking site coming out?

    #60113

    Posted by unregistered user at 10/24/07 1:31 p.m.

    Way to go Facebook!!! Now watch your site start slowing down and get cluttered!

    #60114

    Posted by unregistered user at 10/24/07 1:33 p.m.

    Coming soon to Facebook: Blue screen of death!

    #60119

    Posted by unregistered user at 10/24/07 1:44 p.m.

    Very classy posts made by people with a combined IQ of 87.

    #60120

    Posted by unregistered user at 10/24/07 1:45 p.m.

    Fine. My Facebook account will close.

    Idiots at Facebook.

    Microsoft deserved ugly MySpace...surely.

    #60121

    Posted by unregistered user at 10/24/07 1:46 p.m.

    It is just a deal to sell ads on Facebook, how do you guys expect Facebook to have the blue screen of death, work like vista, etc. Pure bias against Microsoft this.

    #60122

    Posted by unregistered user at 10/24/07 1:48 p.m.

    Why would anyone with common sense think Facebook worth 15 billion? MS has too much money and don't know what to do with it.

    #60123

    Posted by unregistered user at 10/24/07 1:49 p.m.

    Microsoft is so bad these days, it deserves to have bias against it.

    #60125

    Posted by unregistered user at 10/24/07 1:52 p.m.

    It is not because Microsoft has too much money - 35% of the population spending time on social networks is from the Asia-Pacific region and this deal seals Microsoft's stake to sell ads to the rest of the world other than just the US. It will spin a significant income. Facebook may not be $15 billion now but wait till it is an IPO and then you can do what you want to say it is not worth that much but the markets are likely to disagree with you :)

    #60128

    Posted by unregistered user at 10/24/07 1:56 p.m.

    Oh so it is bad because it is new to advertising, to search, to music players, gaming consoles, etc and it is competing against companies who do just that business? How many have products like sharepoint, dynamics, unified messaging, surface, etc? Any answers to that? Who is the leader in Enterprise and Small Business solutions? Microsoft buddy. You cant judge the company based on a few things it is improving on. The other companies HAVE to be spot on with their products because those are the ONLY things they have to generate revenues from. Not the case with Microsoft.

    #60167

    Posted by unregistered user at 10/24/07 3:38 p.m.

    Here is the problem:

    Microsoft USED to be an innovator. They used to lead, not follow.

    Now they are chasing, chasing, chasing. . . .

    That is a sure sign of a behemoth in trouble.

    The question isn't "is this a good deal, will Microsoft benefit, is social networking the wave of the future?"

    The real question is why in the heck is it taking Microsoft THIS FLIPPING LONG to act?

    This will go the way of every other MS effort of the last few years. It will turn into a second or third place joke that is cumbersome, cluttered and worthless.

    #60171

    Posted by Nunatak at 10/24/07 3:44 p.m.

    With one stroke, Facebook has been rendered terminally uncool. If I had a page up on the site, all it would take is the Microsoft 'kiss of death' for me to remove it.

    #60193

    Posted by BeenHereAWhile at 10/24/07 4:45 p.m.

    Poor Microsoft. They're the tech industry equivalent of that forty-year-old guy with a beer gut and a mullet driving around high schools in his rusty Camaro.

    Don't feel bad. You'll always have your glory days of Windows 3.1.

    #60292

    Posted by unregistered user at 10/25/07 4:06 a.m.

    hey, did you want to hear about just another google multi billion dolar deal? have some diversity, enjoy it as long as it lasts :-)

    #60992

    Posted by unregistered user at 10/27/07 2:35 p.m.

    Perhaps one of the reasons that Google and Facebook did not hit it off is that so many Google employees, from top executives down to secretaries, have been defecting to Facebook. Perhaps Facebook did not want to stem that tide of talent, which would probably be an issue if Google had invested in Facebook.

    #62335

    Posted by unregistered user at 11/1/07 5:11 p.m.

    Been here awhile, No more like the new camaro that broadsided me in 83 good thing I was in a heavy metal coronet with retractable lap belts. Microsoft is neither rusty or poor & neither was my first car IT had factory torque.

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