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    October 25, 2007

    Microsoft buys 2% of Facebook for $240 Mil

    Microsoft has won the fight to be Facebook‘s new investor and advertising partner, beating Google in some heated negotiations and getting a stake in the company. Microsoft has not bought Facebook, but it now owns 1.6%-2% of the fastest rising social network, paying $240 million for the stake and setting Facebook‘s value at $15 billion.

    Under the $15 billion valuation, other investors in Facebook now have some idea how much their stakes are worth. The New York Times explains:

    The Microsoft investment throws the value of the holdings of Facebook investors into the stratosphere. Mark Zuckerberg, the 23-year-old Facebook founder who dropped out of Harvard to build the company, owns a 20 percent share which is now valued at $3 billion. Accel Partners, the venture capital firm that invested $12.7 million in May 2005 and owns 11 percent of Facebook, now holds stock worth $1.65 billion.

    The two companies will work together on new forms of advertising, including data from Facebook.

    Among things this money will be spent on: Facebook expects to hire a lot more engineers, doubling the number of employees to over 700 next year. Microsoft on the other hand gets a piece of what is going to be essentially the biggest people search engine on the planet.

    So what does this all mean to me? Well as a facebook app developer, it means there will be much better monetization options coming, more robust infrastructure, and a lot more money flowing into the facebook eco-system. The Facebook economy has just had a major booster shot.

    [Via TechCrunch]

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