I guess Microsoft doesn’t want to be left behind in the Web 2.0 revolution after all. The software giant even beat Google to the punch, putting up a $240 million equity stake in Facebook's next round of financing at a $15 billion valuation, and the companies will expand their existing advertising partnership (a measley 1.6 %).
Shelling out $240 million for a 1.6 percent stake in Facebook may be Microsoft's way of keeping Google away from the social networking site, but the deal may not be worth the money unless Microsft can get Live Search into the service.
As part of this newly 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.
As ZDNet’s Larry Dignan said: “Guess Facebook isn’t a fad after all. And Microsoft CEO Steve Ballmer put up $240 million to prove it.”
Larry went on to say that Facebook has more to lose than Microsoft in the deal. “The Microsoft deal gives Facebook a nice cash infusion for expansion. But does it make sense to hitch your ad wagon to a third-place ad platform? By locking up the U.S. and international markets, Microsoft gets a win. Facebook gets its options limited.”
Just to put things in perspective, the investment equates to about one and a half days of earnings for Microsoft — “a rounding error” on their books.
Microsoft once dominated the technology landscape to the point where it was even accused of being a monopoly. While Windows is still the predominant OS on desktops and clients, it doesn’t seem to be the force it once was. The Windows Vista launch earlier this year was a ho-hum affair, compared to the rock-and-roll razzle-dazzle that accompanied Windows 95, 98 and 2000.
That’s because end-users and companies have so many other options now. There is an open source OS that can run on any machine, not to mention resurgent Apple Macs. And, the Web platform enables people to work, interact, and play from any type of client device — if anything, the OS just seems to get in the way.
But Microsoft continues a tradition of old-line tech companies bolstering new concepts. Remember, Microsoft itself got its big break when IBM threw some of its own pocket change its way back in 1981.
