Microsoft to Invest in Facebook

According to the Wall Street Journal, Microsoft is in talks with Facebook to make an investment for a 5% stake in Facebook. Just weeks ago rumors of a new round of financing for Facebook surfaced. According to the Wall Street Journal article, the new round of financing would value Facebook at $10 billion or more.

Looking for Facebook to go public? It’s going to be a while before that happens if this round goes through. This is also a strategic victory for Microsoft if a deal goes through given their inability to compete effectively with Google. Many in the technology field have been speculating about Facebook’s domination in people search being a major source of future revenue for Facebook, putting them in direct competition with Google.

Look for Google to make a serious counter-offer since preventing Microsoft from purchasing the company would be a huge win. Google has previously made defensive acquisitions and investments to prevent Microsoft from gaining ground in the online advertising market. According to the Wall Street Journal article, Facebook may hold out for a higher valuation of a whopping $15 billion, more than Microsoft is willing to invest.

Facebook has raised approximately $40.7 million in venture capital so far. Look for there latest round to go through in the coming weeks.