The deal gives Microsoft a tiny 1.6 per cent holding in Facebook.
More importantly, however, an expanded strategic alliance signed between the companies as part of the equity deal makes Microsoft the exclusive third-party advertising partner to Facebook.
Microsoft will also begin selling advertising for Facebook internationally on an exclusive basis, in addition to the United States.
“We are pleased to take our Microsoft partnership to the next level,” Facebook chief revenue officer Owen Van Natta said.
“We think this expanded relationship will allow Facebook to continue to innovate and grow as a technology leader and major player in social computing, as well as bring relevant advertising to nearly 50 million active users of Facebook.”
Microsoft Platforms & Services Division president Kevin Johnson said the two companies had partnered well together in the past year, and extending advertising opportunities would benefit both companies, as well as their collective users and advertisers.
“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,” Mr Johnson said.
With about 50 million users worldwide, Facebook is one of the most trafficked web sites in the world, registering 250,000 new users every day – of which 60 per cent are outside the US.
In August last year, the companies announced a US-only strategic alliance that named Microsoft the exclusive provider of standard banner advertising on Facebook using Microsoft’s digital advertising solutions and the Microsoft adCenter platform.
In early 2007, the terms were extended to 2011. This arrangement now applies globally to all advertising.
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