Microsoft Seeks to Make Friends with Facebook

26 September 2007

PALO ALTO, California: The price of friendship could be fixed at around $10 billion (€7bn; £4.9bn) according to industry commentators mulling reported negotiations between Microsoft and Facebook, the social networking website du jour.

The privately-owned online company, which has experienced near-exponential growth during the last year, is now being wooed by the software titan, eager to catch up with arch rival Google's increasing dominance of web advertising.

Microsoft is said to be pursuing a 5% stake in the business for between $300 million and $500m - a far cry from the website's humble beginnings in 2004 as the brainchild of Harvard roommates Mark Zuckerberg, Dustin Moskovitz and Chris Hughes.

Facebook now has more than 52 million monthly users and is growing fast in countries like Britain, Canada and Australia. Analysts expect it to make $30m this year, on revenue of $150m, earned almost entirely through advertising.

Until now the site's founders have spurned the advances of potential partners that have sought outright acquisition, but selling a small stake would bring in capital and give Microsoft a foot in the door.

Comments Gartner research analyst Van Baker "This is the logical alternative to [an outright sale]; beginning to sell pieces of yourself to raise capital and to have the money to be able to invest in additional functionality on the site without giving up control of the direction of Facebook."

Neither Facebook nor Microsoft has commented.

  • Meantime, New York attorney general Andrew Cuomo is reviewing safety on the Facebook site after undercover investigators posing as children were allegedly solicited by sexual predators. The site is accused of laxity in its response to complaints.

    A statement from Cuomo said: "My office is concerned that Facebook's promise of a safe website is not consistent with its performance in policing its site and responding to complaints.

    "Parents have a right to know what their children will encounter on a website that is aggressively marketed as safe."

    Responds a Facebook spokeswoman: "We strive to uphold our high standards for privacy on Facebook and are constantly working on processes and technologies that will further improve safety and user control on the site.

    "We are committed to working closely with all the state attorneys general to maintain a trusted environment for all Facebook users and to demonstrate the efficacy of these efforts."

    Data sourced from Wall Street Journal Online and Data sourced from; additional content by WARC staff