Microsoft dishes out $240 million for 1.6 per cent stake in Facebook

Google and Microsoft were competing for a stake in Facebook. While Google was heavily favored to come out as the winner, the company eventually lost out to Microsoft. Microsoft will earn a minority stake in Facebook worth $240 million.

Previously, the ReadWriteWeb reported that Google was the frontrunner in the race to invest in Facebook. But according to new developments, Microsoft has beat out its arch rival Google, investing more than $240 million in Facebook. Microsoft and Facebook will have a joint agreement in placing ads in the social network according to a WSJ report. Microsoft will sell Facebook’s international display ads, as it already sells banner ads for the social network. The Wall Street Journal reports:

"Microsoft Corp. agreed to invest $240 million for a 1.6% stake in Facebook Inc. that values the social-networking site at $15 billion, beating Google Inc. in a closely watched contest."

Initially, Facebook demanded $500 million from Microsoft, but the two companies closed on a deal worth $240 million. Facebook needs the money to expand worldwide and add more programs to its social network. Though Microsoft will sell the bulk of the advertisements, Facebook will also have its own advertising network which they are trying to develop to cater to the user base and its interests. Facebook will use social profiling to target ads, which Google and others do. Based on a price tag of $240 million a 1.6 per cent stake in the company, Facebook is worth a total of $15 billion. Is Facebook worth $15 billion? Microsoft thinks so. It is good for Microsoft’s new advertising platform adCenter and will give the company a needed boost to compete with Google Ads. In my opinion, I think Google would have been a better choice for Facebook becaues it has a stronger advertising portfolio than Microsoft. I personally hope Microsoft doesn’t destroy, or try take over, Facebook in the future.