A View from Erica Naone
Microsoft Buys Minority Stake in Facebook
After an intense courtship, Microsoft beats out Google to win a piece of Facebook for $240 million.
About a year ago, there were rumors that Yahoo had offered nearly $1 billion to buy Facebook. At the time, many were flabbergasted at the offer, and even more so when they learned that Mark Zuckerberg, the founder of Facebook, had rebuffed it.
Today, Microsoft and Facebook came to an agreement that values the social-networking site at an eye-popping $15 billion. Microsoft will take a $240 million equity stake in Facebook’s next round of financing. In exchange, Microsoft will be the social-networking site’s exclusive third-party advertising platform partner, and it will sell ads for Facebook internationally.
Kevin Johnson, president of the platforms and services division at Microsoft, says, “This is a strong vote of confidence in the innovation that Facebook is doing to deliver on the social-networking experience.” He adds that Microsoft thinks that Facebook could reach 200 million to 300 million users, which would justify the high level of valuation the deal gives the company.
Owen Van Natta, vice president of operations and chief revenue officer at Facebook, says that the company will use the money to continue to fund growth, particularly by hiring new developers.
Both companies say that they aren’t discussing financial terms, or the details of how the partnership will play out. Van Natta did say that Facebook will carefully consider how it makes user data available to Microsoft. “Making sure that we are able to provide a highly relevant and targeted advertising experience is what we focus on every single day, but we also want to make sure that users don’t feel that we violate their trust in any way.”