October 25, 2007 |
Well, it’s happened. Microsoft has made its investment in Facebook. 240 million bucks’ worth.
That translates to about a 1.6% stake for MSFT in the popular social network – if the $15 billion valuation of the company is anything of a solid number. Yes, Redmond’s got 1.6%, and Google and Yahoo! have: 0. Booyah, Larry, Serg, and Yang! Gates’ gang so showed you guys up.
Or something like that. Today, The New York Times report on the news opened with this line: “Microsoft has won a high-profile technology industry battle with Google and Yahoo! to invest in the social networking upstart Facebook.” A strange intro, don't you think? I do, considering that there’s no real reason why Mountain View and Sunnyvale can’t join in the fun concurrently.
And not to poopoo this deal here, but doesn’t Microsoft’s investment of $240m seem a little, you know…small? I mean, that number’s just shy of a quarter-billion, and I think it’s safe to presume that Facebook is worth several billion at the vest least (if not fifteen big ones). So when all’s said and done, MSFT’s piece of the pie isn’t too grand at all. It’s a wee bit of a slice, really. With some perspective, the whole deal starts to look a tad underwhelming, no?
If you’re looking for answers as to why Microsoft made this investment in the first place, look no further than its advertising deal(s) with the social network. At the moment, Redmond has an arrangement with Zuckerberg, in that latter has agreed to allow the former to place its own banners on the site through 2011. And with this new purchase announced today, Microsoft has bagged an international advertising deal with the company as well. Clearly the $240m investment is (I presume) a token of appreciation, and little else.
Revenue gleaned from advertising on the network will of course be shared. As to how much exactly either party gets is still very much under wraps (and not expected to be revealed anytime in the near future), but I’m comfortable with the assumption that Facebook is getting more than it would through a deal with Google, maybe even Yahoo! also.
By the bye, wanna have a giggle? Look at that $240m, and then look at Facebook’s expected revenue by the close of the year ($150m). Heck, as underwhelming as Microsoft’s investment might seem, the company getting the cash ain’t looking so big and mighty, either.
(No, the two numbers aren’t directly connected, but it’s a comical comparison nonetheless.)