Interviews with Digital Media Thought Leaders
Why Did Microsoft Invest in FaceBook?
Podcast Audio | Posted by Phil Leigh on October 30, 2007
If you would like to learn why Microsoft made a $240 million investment in FaceBook that values the four-year-old company at $15 billion, this interview is for you.
Our guest today is Matt Rosoff who is an Analyst with Directions-on-Microsoft. His company specializes in analyzing where Microsoft will be going in the future.
Last week Microsoft purchased a 1.6% interest in FaceBook apparently in exchange for the opportunity to broker ad placements to non-English language versions that are anticipated to be introduced in the coming months. Microsoft already has a similar deal to place ads on FaceBook’s websites in the United States through 2011.
Although FaceBook is less than four years old and has only 300 employees, the deal provides an implied valuation for the privately-held company of $15 billion. Only last year it is thought that the owners turned down an acquisition bid from Yahoo for $1 billion.
The valuation seems to reflect a growing belief that FaceBook can become the dominant platform for Web 2.0 apps in the Social and Business Networking space. For several years, Salesforce.com has been pursuing a similar strategy to expand Software-as-a-Service business applications beyond the CRM programs the company provides on its own. Similarly, WebEx (now Cisco owned) is offering its Media Tone network as a platform to enable other business software providers to enhance their offerings with integrated real-time collaboration capabilities. Siebel (Oracle) is the most recent example.
In short, Web 2.0 is shifting software applications out of the client/server model and into the Internet cloud. The trend creates a need for centers-of-gravity around which similar applications can come to reside. Facebook hopes to evolve into a concentration point for Social Networking. Salesforce.com seeks to have business software programs aggregate within the force.com gravitational field. WebEx aspires to be ether connecting everyone for collaborative purposes.
Length: This audio interview is about 17 minutes long.
Categories: Podcast Audio
Tags: Cisco, digital media, Directions on Microsoft, Facebook, Matt Rosoff, Microsoft, Oracle, Phil Leigh, Salesforce.com, Siebel, WebEx
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[…] October of 2007, Microsoft invested $240 million into Facebook, the booming MySpace-alternative. The purchase was for about 1.6% of the company that was […]