"We chose Microsoft because it, like Facebook, is a technology company at its core and is committed to taking a fresh approach to targeting advertising to social media," Owen Van Natta, Facebook's chief operating officer, said in a prepared statement.
Financial terms not disclosed
The two companies began serious negotiations only last week, and expect the partnership to go into effect by the fall. Financial terms of the deal were not disclosed.
The partnership will allow Microsoft to tap directly into a bastion of social-networking and consumer-generated media, said Steve Berkowitz, senior VP, Microsoft's Online Services Group. "We believe that the combination of Microsoft and Facebook strengths will be incredibly attractive to advertisers as they forge more meaningful connections with one of the largest, most engaged audiences on the internet."
9 million users
Facebook now boasts more than 9 million registered users, according to comScore's MediaMetrix, and ranks as the seventh-most trafficked site in the U.S. Not long after its founding in February 2004 by Harvard University undergraduate Mark Zuckerberg, acquisitions rumors serviced and to this day have yet to abate. Earlier this year, Facebook reportedly turned down a $750 million acquisition offer, asking for a whopping $2 billion.
Rather than cash out, however, the founders have opted to grow independently. In April, they secured $25 million in a financing round led by Greylock Partners. Also participating in the funding round were Meritech Capital Partners, as well as current Facebook investors Accel Partners and Peter Thiel.
Facebook stood out early because of its inherent selectivity, the level of which is determined by each user. In some instances, members only accept messages from others enrolled in their schools. Many users will only make themselves and their profile available to those who can prove they are a friend of someone on their friends list.
The Microsoft/Facebook comes on the heels of a similar agreement between MySpace and search Google. On Aug. 7, News Corp.'s Fox Interactive Media and Google signed a multi-year search and advertising deal covering MySpace and other Fox properties. Google is expected to pay Fox at least $900 million in revenue share payments for that privilege.