Microsoft Defeats Google for $240M Facebook Stake

Microsoft has bested Google in its bid for Facebook. The software giant will invest $240 million in the social networking site in a move that will preserve Microsoft's existing advertising deal with Facebook.

Media reports emerged Wednesday that Microsoft and Google were locked in a battle for a piece of Facebook. Microsoft last year was named the exclusive provider of standard banner advertising on Facebook through 2011. Had Google been successful in its bid, the search engine company would likely have severed or severely clamped down on Microsoft's Facebook advertising capabilities. As a result, Redmond apparently pushed extra hard to maintain the lucrative partnership. Wednesday's deal makes Microsoft the exclusive third-party ad platform for Facebook and expands the deal internationally, Microsoft said.

The $240 million stake is part of Facebook's next round of financing at a $15 billion valuation, according to Microsoft.

Microsoft and Facebook executives issued that standard "we love each other and look forward to a wonderful future" statements. A press conference about the deal is planned for 5pm EST, so stay tuned for more details.

UPDATE: Facebook chose Microsoft over Google because it was pleased with the way Microsoft's ad partnership had developed over the last year, said Owen Van Natta, vice president of operations and chief revenue officer at Facebook.





"We were very fortunate to have a lot of folks who were interested in partnering with us," Van Natta said, though he declined to reveal who else had expressed an interest. "We have been working with Microsoft for over a year now in the US [and that] relationship that has been really great for both of us."

"Being able to deepen [our] partnership with one of the greatest tech companies on planet [was] something that made sense for us," Van Natta said.

The deal with Microsoft will not mean restrictions on third party platform development, he said. There will be "new opportunities to tap into Microsoft technologies and adCenter as we continue to go forward," Van Natta said, though he declined specific details.

He also declined to say whether the deal would mean Facebook applications would be integrated into any of Microsoft's Web properties. Today's deal does not include a Microsoft Web search component, Van Natta said, but he did not rule it out for the future.

Facebook is not revealing who else will be investing in the company.