It has been reported that the Wall Street Journal that Microsoft is in talks with Face Book for a minority share of the social-networking Web site. In what appears to be a desperate attempt to compete with the phenomenon that is Google Microsoft are reported to be offering $300 to $500 million for 5% of Facebook Inc.
The Facebook talks come as Microsoft’s top management is making another significant move at its online-advertising business. The company is expected to give increasing oversight of its Internet operations to Brian McAndrews, an advertising executive who joined Microsoft just last month through its $6 billion acquisition of aQuantive Inc., an online-advertising specialist that is also part of Microsoft’s strategic push. His broad mission will be to increase the number of advertisers that buy ads through Microsoft’s system and Web publishers that tap into it for ads to run on their sites.
During this year Google brought in $3.9 billion in revenue in the second quarter, almost entirely from online ads, while Microsoft’s online group posted revenue of just $688 million in the same quarter.
Microsoft believes a closer relationship with Facebook could help shift the balance of power, by helping it tap into a fast-growing pool of users and advertisers for its platform. Facebook, which is used by more than 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. The company expects this year to have a profit of $30 million on revenue of $150 million, according to people familiar with the matter.