Microsoft wins the hand of Facebook

October 24, 2007: 5:02 PM ET

ms.jpegBy Josh Quittner

Microsoft (MSFT) beat out Google (GOOG) today and won the hand of the most coveted bride in Silicon Valley—the ultra-hot social network Facebook. The software goliath agreed to pay $240 million for a minority stake in the company that would put its total value at $15 billion.

"The opportunity to further collaborate as advertising partners is a big reason we have decided to take an equity stake, and is a strong statement of our confidence in the long-term economics of this partnership," Kevin Johnson, president of Microsoft's Platforms & Services division told the Wall Street Journal, before a press conference that was to begin at 2 p.m. PST.

Microsoft's investment guarantees the software company's exclusive right to sell Facebook's international advertising. According to the Facebook press release, Microsoft is now the "exclusive third-party advertising platform partner for Facebook, and will begin to sell advertising for Facebook internationally in addition to the United States." Nearly 60% of Facebook users connect outside the U.S. "We're very pleased with the scope and depth of our partnership," Johnson said during the call with reporters. Johnson noted that the projected market for online advertising was $40 billion. "It's a big industry," he said. "The equity stake we're taking is a strong statement of confidence about this partnership."

"Just sit back and watch how this partnership develops," he added. "There's a lot we're going to do together."

At this valuation, each of Facebook's 50 million users is worth $306.12.

For the past few weeks, Silicon Valley chatter has centered on who Facebook—the current "it" company—would tap as its partner. Google and Yahoo had been rumored to be among the top suitors. Facebook has been doubling its user base every six months. Owen Van Natta, Facebook's vp of operations and chief revenue officer, declined to name any of the other companies who tried to partner with his company, saying only that "we were very fortunate to have a lot of folks who were interested in partnering on advertising."

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