Microsoft Might Take Stake in Facebook - WSJ

Microsoft is in negotiations to buy a minority stake in social networking site Facebook Inc., according to the WSJ. Microsoft's proposals are said to value Facebook at about $10 billion. Unnamed sources say Microsoft is interested in purchasing up to 5% of the company at a cost of $300-500 million. Microsoft might end up going head-to-head with Google for Facebook, which brushed aside a $1 billion offer from Yahoo last year. Facebook, which might hold out for a valuation of up to $15 billion, is believed by industry observers to be a prime candidate for an IPO in 2008 or 2009. In related news, Microsoft is giving oversight of its online ad business to ad executive Brian McAndrews, whom Microsoft acquired when it bought aQuantive last month for $6 billion. Microsoft, Google, Yahoo and others are competing to construct a "platform" -- a single location at which advertisers can buy ads that appear all over the Internet. Google is well ahead of Microsoft, with an estimated one million advertisers buying ads on its system. Google pulled in $3.9 billion in revenue in Q2, almost all from online ads, against $688 million reported by Microsoft's online group. Microsoft is working with a p.r. firm to combat Google's $3.1 billion acquisition of online ad broker Doubleclick.

Sources: Wall Street Journal, MarketWatch, C|Net News.com, AP, New York Times, TheStreet.com [video], 24/7 Wall Street, Financial Times
Commentary: Microsoft/Facebook Rumors Persist • Will Microsoft Turn Its Sights On Facebook? • Microsoft Hires PR Firm to Battle Google-Doubleclick Merger - WSJ
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Comments

[Jeff Molander_:]

And now that Microsoft has acquired Jellyfish.com what changes? IMO, Jellyfish.com offers a very similar demographic (to Facebook??).

I'm reading a lot of comments such as "It's not a game changer" (coming from analysts). This conclusion relies on things not changing much in terms of how the Web gets monetized. Even Google understands what's coming next -- a slow-down in pay-per-click ad model spending.

Proof's in the puddin: Look no further than Google's:

1) Launching a cost-per-action ("pay-per-action") ad model

2) Launching a tool allowing advertisers to manage (automate placement of) pay-per-click ads against a pre-defined cost-per-action

Google understands the game is about to change and is moving. Is anyone paying attention? MSFT is and they're locking up intellectual property in this move -- one that combines multiple, successful and innovative digital shopping models.

Jellyfish takes a best of breed approach and "mashes them up" to the amusement of consumers: Ebates + Woot.com and on the advertiser-side, eBay's Shopping.com + Google's AdWords auction environment + Commission Junction's (VCLK) performance-based cost model (cost-per-action) with a twist of Google (auctioning off ads).

It all ads up to valuable IP that Google, in theory, cannot access.

2007 Oct 03 11:51 AM