Microsoft Takes $240 Million Stake in Social Networking Site

Published: October 31, 2007

by Alex Woodie

Quick quiz: Name the social networking site that was founded three years ago as an online yearbook for Harvard students, and which is now valued at $15 billion? The answer is Facebook, and last week Microsoft bought a little piece of it.

Eager to position itself in the burgeoning market for Web-based social networking sites, Microsoft expanded its partnership with Facebook and took a $240 million equity stake in the high-flying dot-com company. As part of the deal, Microsoft will be the exclusive third-party advertising platform partner for Facebook. It will also begin to sell advertising for Facebook in the U.S. and in all other parts of the world.

The deal is potentially very lucrative for Microsoft, which has been trying to jump start its online advertising business for years. With a reported 200,000 new users signing up to use Facebook every day, and a total predicted user base of 60 million people by the end of the year, Microsoft could have a very large audience to target with the new aQuantive advertising engine that it acquired earlier this year.

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