Microsoft and Facebook: Mark Zukerberg gets his way

Microsoft buys stake in facebook It is confirmed, Microsoft is in, Google is out. As we mentioned yesterday, Microsoft has announced that it is investing $240 million in Facebook, at a valuation of $15 billion!

This puts the current Microsoft stake in Facebook at 1.6% which is much less than the 5% stake that Microsoft was initially considering. We had written on September 24th, that Facebook CEO Mark Zuckerberg was “pushing for a whopping 15 billion valuation” for the Facebook site. Looks like this round has gone to Mark!

So Mark Zukerberg got his $15 billion valuation for Facebook, but it is not clear if Microsoft reduced the amount that they had planned to invest in the company or whether the 15% share that they had planned on acquiring was based on a lower valuation of $1.6 B. If that were the case, then indeed, Facebook got a a very good deal.

There has been much said about Mark “Zuke” Zukerberg’s spurning of lucrative offers for Facebook, but certainly a lot of credit has to be given for the fact that he has managed to grow the company into the 5th largest Internet presence, right behind the likes of Google, Ebay, Yahoo and Amazon.

Microsoft will begin serving targeted ads to Facebook’s 20 million active users (their user base has been growing by 3% a month). While Google has been spurned by Facebook, they will probably not be sitting still for long. They already have an advertising network deal signed with MySpaces’ parent company Fox Interactive Media, to serve ads to the 100 million MySpace members. One wonders if there is are any ownership discussions in the offing….

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