Microsoft buys stake in Facebook

Facebook valued at $15bn as two cos expand their alliance

25 October 2007 8:12 GMT / By Amy-Mae Elliott

As was rumoured would happen, Facebook and Microsoft have announced that the two companies would expand their advertising partnership and that Microsoft will take a $240 million equity stake in Facebook's next round of financing at a $15 billion valuation.

Under the "expanded strategic alliance", Microsoft will be the exclusive third-party advertising platform partner for Facebook, and will begin to sell advertising for Facebook internationally in addition to the United States.

"We are pleased to take our Microsoft partnership to the next level", said Owen Van Natta, Chief Revenue Officer, 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 nearly 50 million active users of Facebook."

"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 for not only for our two companies, but also our collective users and advertisers", said Kevin Johnson, president of the Platforms and Services Division at Microsoft.

"We have partnered well over the past year and look forward to doing some exciting things together in the future. The opportunity to further collaborate as advertising partners is a big reason we have decided to take an equity stake, and is a strong statement of our confidence in the long-term economics of this partnership."

Sources close the deal say that Google also bid for a stake in the massively popular social networking site, but lost out narrowly to Microsoft.