Microsoft has agreed to invest $240 million for a 1.6% stake in Facebook, beating a competing offer from online search leader Google. Under the deal, the two companies expanded their existing advertising agreement. Microsoft will now become the exclusive third-party advertising platform partner for Facebook, and will begin to sell the site's international advertising.
The deal validates the company’s decision to reject a $1 billion takeover offer from Yahoo last year, and values the rapidly growing social networking site Facebook at $15 billion – less than four years after Mark Zuckerberg started the site in his Harvard University dorm room. Facebook expects a profit of about $30 million this year, on revenue of $150 million. For Microsoft, the deal could also represent a major win as the company tries to grab a larger piece of the online advertising market.