Microsoft reportedly interested in stake in Facebook.com
NEW YORK - Microsoft Corp., lagging behind Google Inc. in the online advertising market, is in talks to purchase a stake of as much as 5 percent in social-networking site Facebook Inc., the Wall Street Journal reported.
The investment may be $300 million to $500 million, giving Facebook an overall value of $10 billion, the newspaper reported on its website, citing unidentified people familiar with the matter.
The talks are still preliminary, and Google has also expressed interest, the newspaper said.
Microsoft, which has an advertising agreement with Facebook in the United States, may want to lock up the site as a source of revenue and keep it away from Google, the most-used search engine. US ad spending on social-networking websites will double to $900 million this year, with Facebook and MySpace grabbing three quarters of that, according to EMarketer Inc.
"Because people spend so much of their time online, because they're engaging deeply in Facebook, the value of advertising in that space could be very high," said Charlene Li, an analyst at Cambridge-based Forrester Research Inc. "You don't have that level of emotional engagement with Microsoft."
Facebook, a privately held company in Palo Alto, Calif., was the 14th most-visited US website in August, with 33.7 million users, according to researcher ComScore Inc., based in Reston, Va. MySpace, owned by News Corp., had 68.4 million visitors, ComScore said.
A Microsoft spokesman declined to comment. A representative from Facebook's outside public relations firm said the company isn't commenting. A Google spokesman said the company doesn't comment on "market rumor or speculation." 