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Microsoft purchases 1.6% of Facebook for $240M

On October 25th, Microsoft Corp. paid $240M for a 1.6% stake in Facebook, valuing the young company with less than $200M in annual revenue, at an astonishing $15B, more than 25 times the amount News Corp. paid for outright ownership of MySpace, which has 107.3M subscribers, more than five times Facebook’s subscriber base of 20M. Facebook’s user base increased more than 6% in September while MySpace grew 1% (which actually means they brew at nearly the same pace in terms of actual subscribers).

This move fairly clearly demonstrates two things:

  1. Microsoft is finally demonstrating that they understand the importance of the web and web communities and are willing to invest substantially in it.
  2. This deal will also allow Microsoft to sell Internet ads for the Facebook website outside the US, expanding a marketing relationship that began last year.

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