Digital Life


Now to this country, where a mighty technology battle has ended. That's the battle to invest in the social networking wunderkind, Facebook. Microsoft has won out over Google and Yahoo. Or, at least, it's won a 1.6 percent stake. The deal values Facebook at $15 billion.

NPR's Wendy Kaufman has more.

WENDY KAUFMAN: Fifteen billion is a staggering figure and reflects more than the value of Facebook's 49 million active users. It reveals just how badly Microsoft wanted, even needed, the deal if it was to keep Google from expanding its lead in online search and the billions of dollars of ad revenue that come with it.

Under the deal signed yesterday, Microsoft will become the exclusive advertising partner for Facebook internationally. It already had the domestic business.

Kevin Johnson is a senior executive at Microsoft.

Mr. KEVIN JOHNSON (President, Platforms and Services Division, Microsoft): I think this deal represents a major advertising syndication win for Microsoft. I think this signals an enormous vote of confidence from our largest advertising partners.

KAUFMAN: And analyst Brendan Barnicle of Pacific Crest Securities believes that Microsoft could benefit substantially from the deal.

Mr. BRENDAN BARNICLE (Vice President and Senior Research Analyst, Pacific Crest Securities): By bringing in Facebook, it gives them more content. And with more content, that drives more traffic. And with more traffic, that's something that you can monetize and, therefore, sell ads on, which, at the end of the day, is what this whole strategy is about.

KAUFMAN: But the analyst cautions that advertising on social networking sites can be tricky. He notes that when News Corp. took over the number one social networking site MySpace and increased advertising, many MySpace users left and moved to Facebook. If Microsoft isn't careful, he warns, Facebook users could go somewhere else, too.

Wendy Kaufman, NPR News.

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