Originally published October 24, 2007 at 12:00 AM | Page modified October 24, 2007 at 6:32 PM
Facebook sells stake to Microsoft for $240 million, spurns Google offer
Rapidly rising Internet star Facebook has sold a 1. 6 percent stake to Microsoft for $240 million, spurning a competing offer from online...
The Associated Press
SAN FRANCISCO — Rapidly rising Internet star Facebook has sold a 1.6 percent stake to Microsoft for $240 million, spurning a competing offer from online search leader Google.
The deal announced this afternoon after several weeks of negotiation values Facebook at $15 billion — less than four years after Mark Zuckerberg started the online social networking site in his Harvard University dorm room.
Microsoft also will sell Internet ads for Facebook as the site expands outside the United States, broadening an existing marketing relationship that began last year.
Besides validating Zuckerberg's decision to rebuff a $1 billion takeover offer from Yahoo last year, Microsoft's money should be more than enough to pay for Facebook's ambitious expansion plans until the privately held company goes public.
Zuckerberg, 23, has indicated he would like to hold off on an initial public offering for at least two more years. In the meantime, Facebook hopes to become an advertising magnet by substantially increasing its current audience of nearly 50 million active users, who connect with friends on the site through messaging, photo-sharing and other tools.
The Facebook investment represents a coup for Microsoft because it provides the world's largest software maker with a toehold in one of the Internet's hottest platforms and a potentially lucrative forum for selling online ads.
Microsoft has been trying to become a bigger force in Internet advertising for several years, only to watch Google deepen its dominance of the space.
In its fiscal year ending in June, Microsoft's online ad revenue rose 21 percent to $1.84 billion. Over the same period, Google's ad revenue totaled $13.3 billion.
With the Facebook investment, Microsoft dealt a rare setback to Google, which had previously trumped its bitter rival in earlier bidding battles involving AOL and Internet ad service DoubleClick.
"Making this investment ... is a great win not only for our two companies, but also our collective users and advertisers," Kevin Johnson, president of Microsoft's platforms and services division, said in a statement.
The coup shows Microsoft is getting more savvy about the Internet, said Matt Rosoff, an analyst for the research group Directions on Microsoft. "I think they understand it now and they're proceeding correctly. Two years ago, I would have said they don't get it at all."
Tim Armstrong, who oversees Google's North American advertising, declined to comment on the Facebook negotiations during s meeting held with analysts today at the company's Mountain View, Calif., headquarters.
![]()
"We have tremendous respect for them," Armstrong said of Facebook.
Although News Corp.'s MySpace.com remains the largest social network, Facebook has been growing at a far more rapid clip during the past year. Facebook attracted 30.6 million U.S. visitors during September compared with 68.4 million at MySpace. Microsoft's social networking equivalent — called "Windows Live Spaces" — attracted an audience of 9.8 million, according to comScore Inc.
Associated Press reporter Jessica Mintz contributed to this story.
Copyright © 2007 The Seattle Times Company
Nintendo re-enlists Mario, savior of video-game industry
Verizon-Frontier deal stirs concern among consumers
Brier Dudley: 'Guitar Hero' founder excited about future
Gaps for consumers in Democrat health care bills
Hutch gets $10M from Bezos family for immunotherapy research

Real Salt Lake wins MLS Cup
Real Salt Lake defeated the Los Angeles Galaxy with penalty kicks after 120 minutes of play at Qwest Field in Seattle.
nwjobs

Post a comment

Michelle Goodman blogs about work/life balance.
How to tell your office you're gravely ill
Post a comment
nwautos

Choosing a new sedan? Weigh the impact of your choice on your wallet and on the planet.
Post a comment
- 'The Road' takes Viggo Mortensen to Mount St. Helens and Astoria, Ore.
- Tugboat sinks at Seattle waterfront pier
- Child-support error costs nearly $21,000
- Craigslist adoption ad: A plea by young mother-to-be? A scam?
- Chase shrugs off loss of CD investors
- Vikings easily beat the Seahawks
- Denny Triangle gains skyline, but tenants slow to come
- Snow piles up on Cascade slopes
- Woman stabbed by stranger in North Seattle
- Husky Men's Basketball Blog | Saturday's Pac-10 games in review
- Vikings easily beat the Seahawks
135 - Child-support error costs nearly $21,000
129 - Palin excitement builds in Tri-Cities
123 - Tight Senate vote launches health care over hurdle
122 - Cutting through breast-cancer confusion
90 - Prosecutor requests life in prison for Amanda Knox
89 - Historic health care bill clears Senate hurdle
88 - Game thread
70 - New York terror trials will restore faith in rule of law
65 - Chase shrugs off loss of CD investors
54
- 'The Road' takes Viggo Mortensen to Mount St. Helens and Astoria, Ore.
- Child-support error costs nearly $21,000
- It's possible to recover a life lost to hoarding
- Washington state wines make annual best-of list
- Banff: powder, peaks & purity
- Chase shrugs off loss of CD investors
- Protect yourself from baggage loss
- Rediscovering Moab, 'the most beautiful place on Earth'
- Denny Triangle gains skyline, but tenants slow to come
- Northwest Living | On Whidbey, a unified home from multiple recycled parts





