Microsoft sees gold in Facebook

It's hard to determine what's more surprising about Microsoft's investment in Facebook - the appraisal that valued a three-and-a-half year old Internet hangout at $15billion (about R100billion) or the rare snub of search engine Google.

It's hard to determine what's more surprising about Microsoft's investment in Facebook - the appraisal that valued a three-and-a-half year old Internet hangout at $15billion (about R100billion) or the rare snub of search engine Google.

The $240million price Microsoft paid for a 1,6percent stake in Facebook demonstrates just how badly the software maker wants to deepen its relationship with a startup that has less than $200million in annual revenue.

By sealing the deal on Wednesday, Microsoft finally trumped Google after losing previous high-stakes bidding battles involving a stake in AOL and ownership of online video sharing pioneer YouTube and Internet advertising service DoubleClick.

"This was a muscle-in from Microsoft," Gartner analyst Allen Weiner said. "It would have been a nice-to-have for Google, but it was certainly not essential."

Besides buying a stake in Facebook, Microsoft will also sell Internet adverts for its website outside the United States, broadening a marketing relationship that began last year.

"This is a strong statement of confidence in this partnership and in Facebook," said Microsoft's Kevin Johnson.

Microsoft's investment underscores the skyrocketing value of online communities like Facebook - a place where web surfers look for dates, connect with friends and family, and share photos, videos and music. - AP

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