Is Microsoft shopping for a social network? The Wall Street Journal reports today that Microsoft may be purchasing as much as a 5% stake in Facebook, a share valued at $300-$500 million. The WSJ speculates that a deal like this could push the value of Facebook into the $10 billion range—exactly the price tag investor Tim Thiel named in July. Further rumors state that Google may also be looking to purchase a stake in the social network.
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.
Facebook and Microsoft signed a deal over a year ago for Microsoft to provide ads on Facebook. If any deal is forthcoming, it may just be a renewal or expansion of the existing deal.
Naturally, Facebook is worth more now than when Thiel said $10b. The Journal says that “Facebook has indicated that it might hold out for a higher valuation – as much as $15 billion – than Microsoft is willing to agree on.” So far, the company has raised less than $41 million in its latest round of funding from VCs.
Let’s don’t forget that Facebook has already pledged almost a quarter of that to its apps providers. Do you think this could put Facebook in a position to be ready to make a big deal? (The WSJ does say that “Microsoft has considered trying to buy the company outright, but people familiar with the matter said it’s unlikely at this time.”)