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Microsoft invests in Facebook

Microsoft invests in Facebook

According to an article published this week on nytimes.com, Microsoft has won a technological battle against Google and Yahoo by investing in the social network Facebook.

Both companies have announced that Microsoft will pay $ 240 million in exchange for a 1.6% stake in Facebook. The investment values ​​Facebook, which at just three and a half years old will add revenues of about $ 150 million this year to $ 15 billion.

The deal has skyrocketed the value of Facebook shares to unheard of figures. Mark Zuckerberg, the 23-year-old Facebook founder, who like Bill Gates dropped out of Harvard to build his own company, owns 20%, which could now be worth as much as $ 3 billion. Accel Partners, the venture capital firm that invested $ 12.7 million in May 2005, has a stake that could now be valued at $ 1.65 billion.

The investment also ends a two-month race among the three main Internet players to be able to invest in Facebook and establish strong ties with the company. The executives of Microsoft and Facebook met in several cities throughout the last month, to consummate the agreement via SMS while Steven Ballmer, president of Microsoft, spoke last week at the Web 2.0 congress held in San Francisco. Final negotiations were completed at Facebook's Palo Alto offices.

As part of the deal, Microsoft will sell the banner display ads that appear on Facebook outside of the US, splitting the proceeds; Microsoft already had a previous agreement with Facebook to manage the banners on the US site until 2011.

The astronomical figures posted on Facebook show that Microsoft could not afford to lose the deal. Google appears to be reaching a dominant position in the race to serve online ads, and faced with the possibility of losing control over the next generation of computer users, Microsoft has tried to go their way and sometimes block it, albeit often costly. .

In a retaliation with journalists and analysts, Kevin Johnson, president of Microsoft's platforms and services unit, described the deal as a "major victory for Microsoft in advertising syndication."

Source: New York Times


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