Yesterday, Microsoft beat out Google by grabbing a 1.6% stake in social networking giant Facebook. Microsoft paid $240 million for the stake, which implies that Facebook's current valuation is $15 billion.
In return for handing Facebook a large sum of money it will use to expand its empire, Microsoft will gain a more prominent role in Facebook's advertising sales. Prior to this event, Microsoft was only slated to provide banner ads in the U.S. Now, they will be Facebook's advertising partner in an expanded role, both in the U.S. and abroad.
It should be noted that Web search is not a part of this deal.
While this is a proud moment for Microsoft, which has struggled mightily to beat Google at anything, it is probably an even bigger crowning moment for Facebook. This $15 billion valuation certainly trumps Yahoo!'s $1 billion bid, and pushes Zuckerberg and crew (not to mention the VC firms backing Facebook) onto cloud nine.
So, is Facebook really worth $15 billion? Is this another piece of evidence for the second coming of an Internet bubble (inflated by voracious companies, not investors this time)? Will Facebook's luster fade away by next year?
Here is some more information about the deal:
http://www.news.com/8301-13860_3-9803907-56.html?part=rss&subj=news&tag=2547-1_3-0-20
http://www.businessweek.com/technology/content/oct2007/tc20071024_654439.htm?chan=top+news_top+news+index_top+story
http://www.redherring.com/Home/23036
http://www.npr.org/templates/story/story.php?storyId=15620630
