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Microsoft invests £117m in Facebook
Author: Phil CogarPublished: 25th October 2007
Facebook now has a massive valuation so refusing a $1 billion buyout from Yahoo last year was a great move by the company.
Microsoft will purchase 1.6 percent of the social networking site for £117 million, which brings the valuation up to £7.3 billion. That's a massive value for a site that is only expected to bring in £73 million in revenue this year. What's important though is that Microsoft managed to keep Facebook out of the hands of Google.
The new deal gives Microsoft the chance sell ads on the site throughout the world. Previously, Microsoft was only able to conduct the advertising business on Facebook in the United States.
Facebook now has the capability to hire new employees and expand the site beyond it's current reach. A new advertising system is already being developed and is set to be unveiled next month at an event in New York.
No matter how much you may hate social networking, there's no denying that it's a major player on the internet now. This deal just goes to show just how big of a role it will play in the future development of the web and software alike. Miniature web OS' could be deployed by Facebook in the near future as the site already features a plethora of web applications.
Rumours have been going on for ages now that Google is in the stages of launching a full fledged web OS, but nothing concrete has surfaced yet.
Do you still think social networking is a fad or are your thoughts starting to change? Let us know what you're thinking over in the forums.
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Comments (29)Stats: 0.037 seconds
To be honest, I think there are two different ways people use such sites. Some people actually use them to network, to meet and interact with people. Most people though I think simply use it as a) an easy way to contact your friends, it's so more casual than email and b) download media from your friends, e.g. photos and music. There ability to simplify contacting your mates remotely is what fuels their success I believe.
Well good on MS. Hopefully their investment does what they wanted. Jeesh, to think all the money over the years that MS has put into company's. Even Apple right?
Facebook is far better than MSN spaces, MySpace and all that stuff becuase it works properly and you can actually have some privacy...
Mature? Are you kidding me! It can be as immature as myspace, and I see it all the time. Sure it's presented in a more eye-pleasing way....
Yeah I haven't liked social networking sites at all before, but I think Facebook is actually decent. I'm hoping though that it stays less cluttered, the thing that makes it better than myspace is that you aren't greeted with people's crappy music and awful wallpaper every time you click on someone's name. Still, I rarely use it, but I think it's a hell of a lot better than myspace.
I suppose MS putting in £117m is a bit like me investing a tenner though (mind you, not even a penny of mine is touching any of them). Valuing facebook at 7bn though, "bubble 2.0"?
Still, I hate the weird way people boast about their huge friend lists. Are those people all your friends then? If someone I don't like or don't even know asks to be my friend I'm damn well not going to let them view my profile. I even got asked once by someone who I knew in school that I bumped into on a night out why I hadn't accepted them as a friend. My reply of I'm not your friend, and I hope never to be (this wasn't a nice person) was given a funny look and then a quick shuffle of to the corner they came from.
Facebook has over 50 million users (worldwide) and growing, I read somewhere that Facebook on average, adds 200,000 new users a day.
This is a huge database, worth a lot more than just £117mil.
The bigger the user base, the more advertising they can attract.
It would be interesting to know what is the average income/salary) of people registered to Facebook.
This should give you some idea of the wealth and potential extra revenue Microsoft could generate.
Facebook advertising can be very targeted, for examples, lets say you like cars, Facebook could possibility only have Car advertising when you log in.
They know this because Facebook knows what your hobbies are.
Facebook could have the potential of be its own web.
Google very much wanted a part of this pie, but MS beat them to it.
The fight between MS and Google is personal but mixed with business sense.
I personally don't think Facebook is worth US$ 15billion, although that is what MS claim Facebook is now worth.
Is there actually a field in one's profile to enter this? Or is that just a generic statement
(if the former, who the hell would fill it in!?!)
(1) Lock-out. 1.6% may not be a large stake but there is a little thing called a shareholders' agreement (i.e. a contract between shareholders as to how they will act). MS will undoubtedly have negotiated an agreement that gives them veto over shares being sold to Google etc.
(2) Exclusivity. Facebook may only generate maybe $150m of revenues this year, and 1.6% of that isn't very much - certainly not a decent return on a $240m investment. MS doesn't care. Let's not forget that with every ad the revenue is split - Facebook gets some and the ad server gets some. What MS is really interested in is the 100% of its own cut of the ad revenues, and by spending $240m on Facebook stock you can bet MS just bought themselves exclusive access to serve up ads on Facebook.
Amen. I have people that I call friends, and simply ignore all the other randomers...
out by a bit there - 1.6%, hence the obscene valuation of $15bn
Um, Facebook does hold a $15bn valuation now dude.
Based on the profits the site generates this is a huge over-valuation, even if it is really valued at this number. It's artificially inflated due to MS's high price of the 1.6% share because they weren't investing in the site purely for it's profit margins.
I feel myspace and facebook have grown apart from each other now, myspace is so much better if your really into music, its a great way to find obscure genres and unsigned that are doing great stuff.
facebook apps piss me off, people have made there profiles equally as **** as most myspace retards with their thurst for as many fb:apps as possible.
myspace > fb