While the storyline would have been more dramatic if Facebook had spurned its current ad-serving partner Microsoft for Google, it is confirmed that Microsoft has won the deal. It will invest $240 million in Facebook and expand its existing relationship to international markets, according to the WSJ. (The previous advertising relationship was only for the U.S., now Microsoft is Facebook’s exclusive advertising partner both in the U.S. and abroad until 2011) The $240 million is a minority stake that values the company at $15 billion. So that comes out to less than a 2 percent stake for Microsoft, which is much smaller than 5 percent stake that was bandied about earlier. (Update: During the conference call, Facebook left open the possibility that more investors may be included in this round of financing, though it declined to disclose who those investors may or may not be. But that does open the door to Facebook raising more than the $240 million).
While Google would have been a closer fit in terms of it overall philosophy (more open than not), it may have just been too expensive to buy out Microsoft from its current deal to supply ads for Facebook in the U.S. Given its deep ties with Microsoft, sticking with them was always the path of least resistance. And one could argue that Google has never felt comfortable targeting ads based on private user profile data, which seems to be the great promise of Facebook, ad-wise. Microsoft doesn’t share those qualms.
We are liveblogging the conference call here.
