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Microsoft buys 1.6% of Facebook

FacebookIt was a fierce battle between Microsoft and Google in gaining a stake on Facebook. Earlier today, Facebook announced that it has made an agreement with Microsoft for a 1.6% equity stake worth $240 million.

Wow! That makes Facebook total valuation at $15 Billion (with a big B). Facebook could now become the 5th largest pure internet company in terms of market capitalization, right after Google, eBay, Yahoo and Amazon.

But why such a small purchase? Why Microsoft?


 




Well, this purchase was all about advertising. Google and Microsoft wanted to put their foot in front of the door. And the best way to strike an exclusive advertising deal with Facebook was to buy into the company. Now that Microsoft is a stakeholder, they can now position their world-class advertising prowess and promise Facebook more ad revenues than any other.

Google is great with links/text micro-advertising (AdWords/AdSense) but if Facebook just ends up using AdSense, they don’t need to partner with Google as anybody can just sign up with AdSense. Besides, AdSense has poor performance track record with social networking sites.

With Microsoft’s ad sales team, they can deliver top notch banner ad deals with Facebook. That’s sure money for each and every ad impression on Facebook. Microsoft’s $6 billion aQuantive purchase is paying off for the Redmond giant.



Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

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7 Responses

  1. Lonely Pinoy says:

    Right now I am using Kontera for my Song Lyrics blog. I believe it is owned by Microsoft.

  2. minor says:

    wow mas mahal pa ang facebook sa national budget ng pilipinas

  3. Berlin says:

    I always thought that Zuckerberg dislike Google or Apple for some reason. And he just gave Google the finger here. But this move could be similar what Google did to Yahoo. Yahoo was powered by Google for a long time, making Yahoo their sugardaddy. Facebook can turn against MS anytime once they finish working on their web OS. That web OS, btw, is nicknamed Parakey which Zuckerberg bought from another youngy, Blake Ross, founder of Firefox.

    Right now, Facebook is focusing on behavioral targetting (the holy grail of online advertising) instead of paid advertising like adsense. They’re taking on Google head-on. Google just made a 500 million advertising deal with Myspace. So why give everything to Google? MS is allowed to advertise 3rd-party ads on Facebook. And I’m sure they have companies loaded with cash lining up.

  4. frank says:

    now they will control this..

    http://www.xtremegadgets.net

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