Microsoft tried to buy Facebook outright for $15 billion

By on December 9, 2010, 4:05 PM
A few years back, Microsoft wanted to buy Facebook for $15 billion. Microsoft CEO Steve Ballmer was really interested, but apparently Facebook CEO mark Zuckerberg said no and the acquisition never happened.

"Yeah, we tried to acquire Facebook," Microsoft M&A executive Fritz Lanman said today at Le Web conference in Paris, according to Seattle PI. "Facebook had a lot of similarities to Microsoft back in the day."

Of course, the deal never went through and Microsoft instead ended up paying $240 million for a 1.6 percent stake in Facebook. Microsoft was criticized for inflating the Facebook value to $15 billion but given that the social networking site is now estimated to be worth at least $50 billion, we'd say it was a smart move. Still, Redmond probably would have rather bought Palo Alto outright.

It's been known for a while now that Microsoft proposed to acquire Facebook, but a Microsoft executive has never admitted the buyout attempt publicly. David Kirkpatrick, author of the book "The Facebook Effect" first described the conversation between the two companies. Here's an excerpt that shows how the story goes:

Microsoft CEO Steve Ballmer had flown to Palo Alto to visit his young counterpart twice. As Zuckerberg is wont to do, he took Ballmer on a long walk. Zuckerberg told Ballmer that Facebook was raising money at a $15 billion valuation. But Ballmer had come with something more sweeping in mind. "Why don't we just buy you for $15 billion?" he replied, according to a very knowledgeable source. Zuckerberg was unmoved even by this offer. "I don't want to sell the company unless I can keep control," said Zuckerberg, as he always did in such situations.

Ballmer took this reply as a sort of challenge. He went back to Microsoft's headquarters and concocted a plan intended to acquire Facebook in stages over a period of years to enable Zuckerberg to keep calling the shots. But Zuckerberg rejected all the overtures. What Ballmer finally agreed to instead was an advertising deal that included a provision for Microsoft to pay a huge amount, $240 million, for a sliver of Facebook, 1.6%. Microsoft's investment gave Facebook an implied value of $15 billion.





User Comments: 27

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TomSEA TomSEA, TechSpot Chancellor, said:

""Facebook had a lot of similarities to Microsoft back in the day."

Huh???

Benny26 Benny26, TechSpot Paladin, said:

I still can't get over that 50 billion figure...Madness it is, although kudos for not handing over to Microsoft Zuckerberg.

Leeky Leeky said:

I'm sorry, but if I owned FB I'd be heading to the bank with a 50 Billion dollar cheque right now. It won't be worth that in a few years time....

mario mario, Ex-TS Developer, said:

It's worth 50bn dollars in theory, but remember they are a private company and their profits are confidential.

Facebook is not worth 33000000000: [link]

Leeky Leeky said:

If I could get 1 billion dollars I'd be doing the same thing as I said above - But I totally get your point. Thanks for the link.

Guest said:

"I still can't get over that 50 billion figure...Madness it is, although kudos for not handing over to Microsoft Zuckerberg."

You think Microsoft is more evil than Facebook?

matrix86 matrix86 said:

TomSEA said:

""Facebook had a lot of similarities to Microsoft back in the day."

Huh???

My thoughts exactly, lol. Could use an explination there.

Benny26 Benny26, TechSpot Paladin, said:

Guest said:

You think Microsoft is more evil than Facebook?

Hell yes. Microsoft are trying to get their greasy mits on everything..Instead of compeating, Microsoft's policy seems to be just buy out what ever is in the way (yeees i know, capitalism right).

One day, it will just be Microsoft and Google ruling the waves..At least Zuckerberg had the guts to say "nah, 15 billion don't fill me Gates"...I agree with Leeky though, i would probably be on my private island by now without a care in the world...Drinking some sort of strong cocktail.

madboyv1, TechSpot Paladin, said:

Benny26 said:

Guest said:

You think Microsoft is more evil than Facebook?

Hell yes. Microsoft are trying to get their greasy mits on everything..Instead of compeating, Microsoft's policy seems to be just buy out what ever is in the way (yeees i know, capitalism right).

One day, it will just be Microsoft and Google ruling the waves..At least Zuckerberg had the guts to say "nah, 15 billion don't fill me Gates"...I agree with Leeky though, i would probably be on my private island by now without a care in the world...Drinking some sort of strong cocktail.

First, It wasn't Gates, it was Balmer. Second, considering how Facebook essentially sells your information (I'm sorry, makes available) to advertisers, I'd find that to be potentially more dangerous. Third, Google is far more guilty of buying out other companies than Microsoft, ESPECIALLY as of late.

Your argument, she has been taken by Davy Jones' Locker.

lawfer, TechSpot Paladin, said:

TomSEA said:

""Facebook had a lot of similarities to Microsoft back in the day."

Huh???

^This. So much.

Waiting for an explanation...

Lurker101 said:

What you lot haven't considered yet though, is what would Facebook be like if Microsoft had bought Facebook outright?

Johny47 said:

This is a perfect example than way too much money than good sense =/

Guest said:

I'm still not on Facebook, don't use it or view it and never intend to.

brianmsu said:

madboyv1 said:

Benny26 said:

Guest said:

You think Microsoft is more evil than Facebook?

Hell yes. Microsoft are trying to get their greasy mits on everything..Instead of compeating, Microsoft's policy seems to be just buy out what ever is in the way (yeees i know, capitalism right).

One day, it will just be Microsoft and Google ruling the waves..At least Zuckerberg had the guts to say "nah, 15 billion don't fill me Gates"...I agree with Leeky though, i would probably be on my private island by now without a care in the world...Drinking some sort of strong cocktail.

First, It wasn't Gates, it was Balmer. Second, considering how Facebook essentially sells your information (I'm sorry, makes available) to advertisers, I'd find that to be potentially more dangerous. Third, Google is far more guilty of buying out other companies than Microsoft, ESPECIALLY as of late.

Your argument, she has been taken by Davy Jones' Locker.

This^. Benny26 was post was clearly out of resentment for Microsoft and without reason

Benny26 Benny26, TechSpot Paladin, said:

First, It wasn't Gates, it was Balmer. Second, considering how Facebook essentially sells your information (I'm sorry, makes available) to advertisers, I'd find that to be potentially more dangerous. Third, Google is far more guilty of buying out other companies than Microsoft, ESPECIALLY as of late.

Your argument, she has been taken by Davy Jones' Locker.

Oh yes sorry, i forgot that Gates had no input in those sort of things...Davy's locker my ****. Bill was and always will be the puppet master (and rightly so).

Benny26 was post was clearly out of resentment for Microsoft and without reason

The only resentment i have is for tactics, not for the company itself...

Besides, i have windows 7 and i love it to be honest. I like the quality Microsoft put in to their products...The prices although, can be eye watering sometimes for what you're actually getting.

matrix86 matrix86 said:

Benny26 said:

Oh yes sorry, i forgot that Gates had no input in those sort of things...Davy's locker my ****. Bill was and always will be the puppet master (and rightly so).

No, he was saying your argument was taken down to Jones' locker. Not Gates.

You say you have no resentment for Microsoft, but you think it would be evil for Microsoft to buyout facebook without a valid reason as to why. How could M$ possibly make facebook any worse than it already is? They aren't constantly criticized for changing privacy setting on their users without telling them, and we haven't had to worry about our information being sold (erm..."made available" to advertisers. Facebook is bringing in a TON of cash...buying it would be a smart move for M$. It's not about control, it's about money (hence their entrance into the search world with Bing and their reintroduction of their smartphone OS). They see how much is being made and they want that.

If M$ were to buy facebook, they could potentially turn it around and actually make it something nice without its users constantly complaining about their privacy. This, in turn, would make facebook last even longer. But this is considering M$ would actually be fair to facebook users and not continue the anti-privacy charade we are already seeing with facebook.

Besides, i have windows 7 and i love it to be honest. I like the quality Microsoft put in to their products...The prices although, can be eye watering sometimes for what you're actually getting.

This, I highly agree with, lol.

lchu12 lchu12 said:

It's all about perspectives... If I had a share in Microsoft, I would be cheering on all their business endeavers. No matter how "evil" it is, besides its not like they are leaking classified strategic sites to everyone including the terrorists.

Benny26 Benny26, TechSpot Paladin, said:

Matrix86 said:

No, he was saying your argument was taken down to Jones' locker. Not Gates.

lol, there's obviously some communication problem here..I know what Davy jones locker is and i'm not "arguing" anything. I have an opinion just like everyone else.

Hey, i never said the "evil" word either..I (just in my own opinion) think that it's better for facebook and business in general, that M$ didn't get it. You on the other hand obviously think the opposite, and fair enough.

Microsoft's dominance in the PC software market and it's general size overall is quite something...I would have thought that if M$ was a bank, the law (in my country at least) just wouldn't allow it to operate.

ET3D, TechSpot Paladin, said:

TomSEA said:

""Facebook had a lot of similarities to Microsoft back in the day."

Huh???

Both were started due to a dead with the devil.

matrix86 matrix86 said:

Benny26 said:

Matrix86 said:

No, he was saying your argument was taken down to Jones' locker. Not Gates.

lol, there's obviously some communication problem here..I know what Davy jones locker is and i'm not "arguing" anything. I have an opinion just like everyone else.

First, I didn't say you didn't know what Jones' locker is. As for your argument, I (or, Leeky I should say) was refering to this:

"Microsoft are trying to get their greasy mits on everything..Instead of compeating, Microsoft's policy seems to be just buy out what ever is in the way."

That was your argument for why you thought it would be "evil" for M$ to buy Facebook. An argument is an opinion or fact used in a debate (which is what we're doing here). So, yes, you were "arguing" just like everyone else, lol.

Benny26 Benny26, TechSpot Paladin, said:

Matrix86 said:

First, I didn't say you didn't know what Jones' locker is. As for your argument, I (or, Leeky I should say) was refering to this:

"Microsoft are trying to get their greasy mits on everything..Instead of compeating, Microsoft's policy seems to be just buy out what ever is in the way."

That was your argument for why you thought it would be "evil" for M$ to buy Facebook. An argument is an opinion or fact used in a debate (which is what we're doing here). So, yes, you were "arguing" just like everyone else, lol.

Ahh, communication problems again. Let's get off Mr Jones eh?.

First off, "evil" is stealing all the children's toys out of an orphanage the night before christmas. My opinion of the tactics (not the business as i've said before) i regard as "not good for business"...Like i said before again "If M$ was a bank in the UK, by law, it wouldn't be allowed to operate" simple as that really.

Second,...Errrm.....Errr...Bedtime i think lol

matrix86 matrix86 said:

I see it more as "laziness" than "evil". There are several other social networking sites out there. Facebook isn't alone, it's just the most popular. Instead of making their own social networking site, they are wanting to buy the most popular one (a smart business move that has more to do with money than control). We still have Buzz and Twitter, plus the much less well known sites that get no publicity, therefore sit in the background of the net hidden from view by the big boys.

So I see no "evil" in M$ wanting to buy out Facebook. And like I said, they would probably even improve it by taking care of all the privacy issues that Mark seems to not care about. Then again, that could be how he's making so much money, lol.

vlad4861 said:

OK PEAPLE..how can u compare microsoft with facebook... facebook is FREE...Microsoft is make me pay everytime i buy something from them...i think i understand that fb has issues with privacy policies or with people that don't read them (I didn't)....but fb has been pretty transparent so far and gave a feedback on their changes of policies and intentions. plz tell me whats wrong with any of this

actionjksn said:

matrix86 said:

Benny26 said:

You say you have no resentment for Microsoft, but you think it would be evil for Microsoft to buyout facebook without a valid reason as to why. How could M$ possibly make facebook any worse than it already is? They aren't constantly criticized for changing privacy setting on their users without telling them, and we haven't had to worry about our information being sold (erm..."made available" to advertisers. Facebook is bringing in a TON of cash...buying it would be a smart move for M$. It's not about control, it's about money (hence their entrance into the search world with Bing and their reintroduction of their smartphone OS). They see how much is being made and they want that.

If M$ were to buy facebook, they could potentially turn it around and actually make it something nice without its users constantly complaining about their privacy. This, in turn, would make facebook last even longer. But this is considering M$ would actually be fair to facebook users and not continue the anti-privacy charade we are already seeing with facebook.

Besides, i have windows 7 and i love it to be honest. I like the quality Microsoft put in to their products...The prices although, can be eye watering sometimes for what you're actually getting.

This, I highly agree with, lol.

Before anybody starts defending FB, I am on FB, only because of my wife. They are truly awful, what a bunch of privacy setting changing, privacy stealing ba$$tards.! I have much more respect for MS than FB. . MS at least never changed my privacy settings, and Google is no better. And Google never creates anything. All they do is buy people out.

matrix86 matrix86 said:

[Quote]actionjksn said:

And Google never creates anything. All they do is buy people out.

You sure about that? They created their own:

~search engine

~browser

~mobile OS and finishing up a Computer OS

~apps (google voice, docs, maps, ect etc)

~social network (buzz...though it's not very popular)

~google tv

~and I'm assuming their internet fiber network is still in play (haven't heard much about it)

I'd say Google has created a lot of their own stuff. Youtube is the only thing I can think of that wasn't created by Google. Do correct me if I'm wrong. I'm getting all this from memory, which is something I'm not very good at, lol.

Benny26 Benny26, TechSpot Paladin, said:

@ actionjksn

You have quoted Matrix86 giving me an ear full along the lines of "Facebook is worse than Microsoft" and quoted me saying i like Microsoft. Also, you have the "who said what" mixed up...

Then you had a go at Facebook yourself, although nethier me nor Matrix have defended Facebook in those quotes?.

I think i said all that right lol.

Guest said:

Zing! I personally trust my information with MS a lot more than with FB. If FB weren't so damn addicting I would block it for good, given how much you surrender to it when you even touch the site.

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