Microsoft reached a deal to invest up to $250 million for a minority stake in Facebook, and will sell advertising on the site outside the U.S., beating Google in a closely watched contest. The companies have discussed a valuation for Facebook as high as $15 billion.
The agreement comes after intense lobbying by Microsoft and Google for Facebook’s hand. In recent weeks, executives including Microsoft Chief Executive Steve Ballmer have courted the three-year-old social-networking company, which this year expects a profit of $30 million on revenue of $150 million, according to people familiar with the company.
In addition to selling ads on its own, the company over the past year has started placing ads through a deal it signed last year with Microsoft, under which Microsoft brokers banner ads on Facebook’s U.S. site until 2011.
The deal signed today is an expansion of that agreement and focuses on international versions of the Facebook service, which Facebook is now starting to open. A deal with Microsoft would allow Facebook to shift some of the burden of selling international display ads to its larger partner. Microsoft in recent years has built up a large online advertising sales force and has invested in technologies to broker advertising over the Web.
We think it will be interesting to watch (Microsoft or no Microsoft) if Facebook can keep its “mojo” going. Will MS play a role? Will the “cool” Facebook user look elsewhere. We mention that only because a year or so ago it was a MySpace world. Things change.
This entry was posted
on Thursday, October 25th, 2007 and is filed under Information Industry, Search News.
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