Microsoft Corp. is in talks with Facebook Inc. about making an investment in the social-networking startup that could value Facebook at $10 billion or more, according to people familiar with the matter. The talks set up another likely face-off between tech titans: Google Inc. has also expressed strong interest in a possible Facebook investment, said people familiar with the matter.
Microsoft's approach to Facebook in recent weeks with proposals to invest in the fast-growing site is part of the software giant's effort to catch up with the Internet rival Google. If successful, Microsoft's talks with Facebook could give it an up-to-5% stake in the closely-held startup—a stake potentially valued at roughly $300 million to $500 million, the people familiar with those talks said.
The people familiar with the matter said that the discussions are still preliminary and Facebook could wind up not taking an investment from either Microsoft or Google. Factors in the discussions include the valuation the suitors would offer to Facebook and other business considerations they could contribute to sweeten any deal.
A Facebook spokeswoman and a Microsoft spokesman declined to comment. A Google spokesman could not immediately be reached for comment.
Facebook, which is used by over 40 million people to set up their own personal Web pages, to communicate with each other and to share photos and videos, has emerged as the poster child for the latest Internet wave. An investment in Facebook could give Microsoft or Google greater opportunities to tie their services in with Facebook at a time when they've both recognized that social networking is changing how consumers tap into their core activities, such as Web search and email.
The Facebook approach is also part of Microsoft's urgent attempt to strengthen its ad "platform," which lets advertisers automatically place ads on Web sites and on Microsoft's Internet search engine.
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