Microsoft Spins Off Social Network Site

Microsoft said late Tuesday that it had spun off a social networking tool developed by its research labs into a separate company. Named Wallop, the service will be led by experienced entrepreneur and CEO Karl Jacob.

Bay Partners will provide the startup with financing, and it would be based in Silicon Valley. Initially, the company will have 12 employees, although it is unclear if any of those employees are from the Wallop project that was created at Microsoft Research.

Microsoft says that its version of social networking is superior to the current MySpace-like system. Those systems prevent people from interacting like they would in the real world, the company claims.

Instead of needing to actively search out friends, a Wallop user's specifics are placed into special algorithms that would automatically build and maintain their network.

"What is exciting to us is Wallop's vision to turn social computing on its head and significantly change how we look at this sector," Bay Partners venture partner and Wallop board member Eric Chin.

Wallop is being tight-lipped about what exactly it is developing outside of what was disclosed in Tuesday's press release. However, the company did say a product is planned to be launched later this year.

"Wallop seeks to mimic real world interactions in the online world. The service is highly visual and offers cues that make it much more obvious what social groups users are in and what is the relationship of different groups," explains Jupiter Research senior analyst Joe Wilcox.

"At a real world party, for example, people might form small groups. It's easy to see which groups close friends have moved to or, by cues like appearance, which groups might be appealing to join. Wallop seeks to mimic this kind of real world socializing."

The start-up is part of a bigger initiative by Microsoft that began in May of last year. The company is attempting to recoup the billions it spends each year on research by licensing or spinning off technologies developed in its labs.

In the case of Wallop, Microsoft will have a minority stake in the company and a non-voting seat on the company board. No other terms of the deal have been disclosed.

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