Microsoft invests £117m in Facebook

Author: Phil Cogar
Published: 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.

One month after we reported on Microsoft's possible investment, the company has finally sealed the deal and bought a stake in Facebook.

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.