Thursday, October 25, 2007

Did MS help or hurt Facebook?

Microsoft paid $240 million to invest in Facebook. This is a pretty small amount for Microsoft, but since it's for less then a 2% stake in Facebook it puts a perceived value of Facebook at $15 billion. While this might make the people at Facebook feel pretty good about themselves, I wonder if this really helps them as much as it helps Microsoft. Effectively Microsoft was able to pay $240 million to prevent any other company from buying Facebook since very few company will want to spend that much money on a social networking site. This is as good as MS buying Facebook for chump change.

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