Date: Thursday, October 25, 2007

Microsoft Beat Google to Buy Facebook Share

Microsoft has beaten rival Google in buying a minority stake of the social networking phenomenon, Facebook. The stake, thought to be around 1.6%, was bought for $240 million with the overall value of the site thought to be around $15 billon. Before settling on terms, it is thought that the Microsoft deal took several weeks of negotiation.

Last year, Facebook founder, Mark Zuckerberg, refused a $1 billion offer for the site from Yahoo and he is also thought to have recently rebuffed an offer from Google. Microsoft will be please to trump Google in this case, as the search engine giant had beaten them in a $1.65 billion acquisition of video sharing site, You Tube, last year.

Microsoft already sells advertising banners and links on the US arm of Facebook, although the new deal will see them do this in other countries too. Facebook is free to users, who are able to upload photographs, maintain personal web pages and communicate with their friends. However, as the number of members on the site is constantly increasing, potential advertising revenue is thought to be massive.

Some analysts believe Microsoft have paid too much for the site. Toan Tran, of Morningstar, believes the company has taken a gamble. He said: “The only way that this works is if Facebook becomes the users’ operating system on the Internet.” Other critics have also noted the similarity of Microsoft’s move to Rupert Murdoch’s 2005 takeover of Myspace for $580 million. At the time, Myspace was the most popular social networking site on the web, but it has recently seen its popularity rivalled by Facebook. Because of this, many believe that acquiring Myspace has proven to be an expensive mistake for Murdoch.

Mark Zuckerberg, 23, started Facebook at Harvard University four years ago. The site now boasts over 49 million users and is one of the Internet’s great success stories.

Sources: 

Guardian

BBC

Times