Microsoft to Take 1.6% of Facebook at $240 million

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We’re spot on! We sensed something is going to happen and it has happened! The much expected deal between Facebook and Microsoft has struck officially now.

According to news reports, during its next financing round, Microsoft will be taking a $240 million equity stake in Facebook valuing it at a whopping $15 billion. The final deal at 1.6 percent stake is smaller than the initial speculations of 5 to 10 percent as reported in recent weeks.

Both parties expressed positive signs of confidence on this occassion.

In a statement, Owen Van Natta, Facebook’s VP Operations and Chief Revenue Officer said, “We are pleased to take our Microsoft partnership to the next level”. “We think this expanded relationship will allow Facebook to continue to innovate and grow as a technology leader and major player in social computing, as well as bring relevant advertising to the more than 49 million active users of Facebook.”

Kevin Johnson, Microsoft’s president of platform and services added, “It’s a strong vote of confidence in the innovation that Facebook is doing”.

Both Johnson and Owen emphasized on advertising partnership being the focus of the deal between the two companies.

According to agreement terms, Microsoft will continue to be the exclusive third-party advertising partner for the Facebook and its ads will go beyond America to cater to Facebook’s international presence. However currently, the deal has not been expanded beyond its 2011 expiration date. Further, Facebook won’t be integrated into Microsoft’s existing services and similarly Microsoft’s applications like Windows Messenger won’t be integrated into Facebook.

It would be interesting to see the specifications of Advertising strategy and how the deal will be worked out. More importantly everyone is now looking to hear Google’s reactions on the deal.