WSJ: Microsoft, Google Considering Facebook Stake

Microsoft is apparently looking to purchase a five percent stake in social networking site Facebook, the Wall Street Journal reports.

The move is valued at some $300 to $500 million, which would place a value on the company of anywhere between $6 and $10 billion. The Redmond company is not the only one eyeing the site: Google is also said to be interested as well.

With two of the tech industry's biggest heavyweights vying for a stake in Facebook, it could push the value of the site even higher. However, talks are in the very early stages and could still fall through, WSJ sources say.

Facebook was the second largest social networking site as of June 2007 according to comScore, and had grown some 270 percent over the previous year. In comparison, market-leading MySpace, with about twice the number of visitors during the same period, only grew 72 percent.

Currently the site has about 40 million users. In the case of both Google and Microsoft, an investment could lead to tie-ins with currently available services. At the same time, it would also present an interesting conundrum for Microsoft.

Microsoft currently runs its own social networking platform in Spaces, though its concept is somewhat different than those of other sites. Instead of basing the concept around the idea of "friends," Spaces more aims to accentuate the idea of personalization, allowing users to share blogs, photos, and other content through connections to its Live Messenger platform.

Its unclear what role Spaces would play if Facebook comes into Microsoft's overall plan.

However, such a move could also give Microsoft a large platform on which to kickstart its online advertising efforts. Right now, a majority of adCenter's ads are delivered on Microsoft-owned sites: a Facebook tie-in could significantly expand its network and reach.

Facebook currently uses Microsoft for its ads in the US through 2011. However, part of the agreement could lead to a global expansion. Discussions on ads have occurred with Google, but its agreement with Microsoft limits Facebook's abilities there.