Microsoft pips Google to acquire a stake in Facebook

25 October 2007

Beating its search rival Google, software giant Microsoft has acquired a 1.6-per cent stake in Facebook for $240 million, placing a valuation of $15 billion on the popular social networking site.

Microsoft rival Google and Yahoo had been keen to invest in the site, with Yahoo having offered to acquire the site for a $1-billion last year. Facebook spurned offers from both.

What may have weighed in Microsoft''s favour is its intention to place third-party advertising on Facebook, unlike Google, which wanted incorporate the site in its own social-networking platform.

Earlier this month, Google, which beat Microsoft to acquire online video sharing site YouTube for $1.65 billion last year, acquired Jaiku, a Finnish start up that enables mobile telephone users share messages.

According to the deal Microsoft, which already places banner advertising and links on Facebook exclusively since last year, will become the exclusive third-party advertising partner for Facebook, and profit from selling advertising for the site internationally and in the US.

Facebook allows its 50 million users to set up personal web pages and communicate with each other. It expects to expand its user base to emerge as the most sought advertising media.