According to the Wall Street Journal Microsoft is in talks to buy up to a 5% stake in Facebook for $300-500 million. That would value the company at up to $10 billion. The WSJ is also reporting that Google is interested in an investment in the social network and could set up a stand off between the two rival tech giants.
The Journal reports that the discussions taking place so far are in their early stages and that Facebook could wind up not taking any investment (or could turn to financial investors, from whom they have already raised over $40 million). Spokespeople at both Facebook and Microsoft declined to comment on the matter to the WSJ, while a spokesman at Google could not be reached. I think it’s safe to assume Google would be mum on this one too.
Facebook has been rumored to be in acquisition talks with Yahoo! twice before, first in September of last year and again this past June. However, Microsoft has been providing display advertising for Facebook for over a year, while Google provides ads for Facebook’s archrival, MySpace.
Could the Microsoft ad deal give them a potential leg up on any talks that might be going on? That probably depends on how well the ads are performing and how the current deal is structured. The Wall Street Journal’s source also said that Facebook and Microsoft are discussing an extension to that advertising deal beyond its 2011 expiration date. The source told the WSJ that Facebook has considered deals with Google, but are limited by the current Microsoft agreement.
Facebook reportedly wants to raise up to $500 million to use for acquisitions (they made their first this summer when they bought web OS company Parakey), beefing up their infrastructure, and expanding their workforce. According to the Wall Street Journal, Facebook is holding out for a higher valuation than Microsoft is willing to indulge — as much as $15 billion.
In other Facebook news, the New York State Attorney General has subpoenaed Facebook regarding user safety. The AG’s office is investigating the social network to determine whether Facebook is doing enough to keep young users safe from sexual predators. Reuters reports that investigators have conducted tests of Facebook’s safety and privacy controls by posing undercover as minors. The “investigators found they were solicited by adult sexual predators on Facebook and could access pornographic images and videos,” writes Reuters.
