The Wall Street Journal is reporting that "Microsoft is to invest up to $250 million (£125m) for a minority stake in Facebook, and will sell advertising on the site outside the US, beating Google in a closely watched contest. The companies have discussed a valuation for Facebook as high as $15 billion."
The value of the deal doesn't actually tell you how much Microsoft has bought in Facebook, nor how much the advertising deal is worth. In the long term, the latter might be the more valuable one, as Bobbie and I explained in a piece last week:
the future of making money from social networks is reckoned to lie in having the best advertising network (or platform): being able to thrust carefully targeted pieces of text, pictures or even video in front of people's eyes. The more adverts you serve across many networks, the better you know which ones work. If Microsoft gets to find out what Facebook's users like - even anonymously - it will gather a body of data that will be unrivalled. In August 2006, Google signed a deal in which it will pay News Corporation $900m in stages until 2010 to be the exclusive provider of ads and search for MySpace and other Fox sites.
The danger though is that it could leave the big sites with nothing more than a huge herd of users to look after, while the companies that once positioned the adverts on them become more powerful.
What do you think: has Microsoft got its hands on the crown jewels, or is this money it could as well have burnt on a remote Scottish island?
