Microsoft expands Facebook alliance
Microsoft will take a 240-million-dollar stake in the wildly popular social-networking website Facebook as part of an expansion of the strategic alliance of the two firms, the companies announced yesterday.
Microsoft will become the exclusive third-party advertising partner for Facebook, and will begin to sell advertising for Facebook internationally in addition to the United States, the companies said.
“We are pleased to take our Microsoft partnership to the next level,” said Owen Van Natta, vice president of operations and chief revenue officer at Facebook.
“We think this expanded relationship will allow Facebook to continue to innovate and grow as a technology leader and major player in social computing, as well as bring relevant advertising to the more than 49 million active users of Facebook."
The deal came after reports of fierce competition between Microsoft and Google for an exclusive deal with Facebook, one of the fastest-growing websites worldwide.
The stake by Microsoft is part of Facebook's next round of financing and values the fast-growing company at 15 billion dollars.
“Making this investment and expanding this partnership will position Microsoft and Facebook to better take advantage of advertising opportunities around the world, and is a great win not only for our two companies, but also our collective users and advertisers,” said Microsoft executive Kevin Johnson.
“We have partnered well over the past year and look forward to doing some exciting things together in the future."
In 2006, the two companies announced a US-only strategic alliance that named Microsoft the exclusive provider of banner advertising on Facebook. In early 2007, the terms were extended to 2011.
Facebook along with MySpace is one the fast-growing social networking website allowing people to exchange information, play games and otherwise interact, and has some five million members around the world.
A privately held company based in Palo Alto, California, Facebook sees an average of 250,000 new users registering each day and is one of the mostly heavily used sites on the Internet.
Facebook's popularity has surged worldwide since it began allowing users to customise web pages with their own computer applications and expanded its membership beyond academia.
Facebook is the second-largest social networking site behind MySpace, acquired by Rupert Murdoch's News Corp. in 2005 for 580 million dollars.
Mark Zuckerberg and co-founders Dustin Moskovitz and Chris Hughes launched Facebook from their Harvard dormitory room in 2004, and reportedly have rejected offers for the company for as much as 10 billion dollars.
Google co-founder Sergey Brin downplayed the significance of its efforts to get a piece of Facebook.
“We don't feel at a high level we need to own everything successful on the Internet,” Brin told analysts without directly mentioning Facebook.
“We have a very successful networking product Orkut, which is more popular in Brazil and India. We have a great relationship with MySpace which is number one in the US. We partner now with on the order of 20 or so social networks."
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