Microsoft Buys Stake of Facebook

San Francisco, Calif. (AHN) - Software conglomerate Microsoft Corp. has purchased a $240-million 1.6 percent stake of the growing social network website Facebook.

The deal allows Microsoft to place ads on Facebook outside the United States, as 60 percent of Facebook's 49 million active subscribers reside overseas.

In return, Facebook has escalated to a $15-billion value. Microsoft has also agreed to sell banner ads for the social network website all over the U.S. until 2011.

Kevin Johnson, Microsoft president of the Platforms and Services Division described the deal as "an enormous vote of confidence" from Facebook, which he referred to as Microsoft's "largest advertising partner."

One other fact that the deal underscores is the fast-paced rise in popularity of Facebook, whose subscription base is reported to have been rising by 200,000 registered users per day, reported Businessweek.

The deal has also placed Microsoft over Google, after a series of failed attempts to trounce the internet titan. Although Google also came with their own offer for Facebook, the company apparently replied with a surprising snub, opting for Microsoft.

The Associated Press quoted Allen Weiner, Gartner analyst, who said that the sealing of the deal is "a muscle-in" for Microsoft Corp. He added by saying that it was not an essential deal to be made by Google, but it would have been another good addition to the long list of acquisitions made by the company.

Although Facebook authorities refused to reveal the reason for refusing Google's offer, Vice-President Owen Van Natta expressed, "We were very fortunate to have a lot of folks interested in partnering with us around advertising."

Google has already acquired advertising rights from the top-ranked social networking website MySpace. The deal enabled Google search-related ad placement on MySpace, as well as function as the website's main search engine.

Facebook is owned and run by 23-year old Mark Zuckerman.