Microsoft and Facebook: Their Love Will Go On

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There isn’t much I can say that will add to the basic facts of the story, as reported by, oh, let’s say, the New York Times:

The two companies said on Wednesday that Microsoft would pay $240 million for a 1.6 percent stake in Facebook. The investment values Facebook, which is three and a half years old and will bring in about $150 million in revenue this year, at $15 billion.

(Notice how I italicized Times, above, and left “New York” plain. That’s what they teach you here at Time magazine. We’re professionals.)

I was on the call yesterday for the press conference, which was a predictable hash of analyst-speak and somewhat embarrassing intercorporate love. Certainly there were no surprises — nobody wanted to dish about whether the partnership will go further than the ad-selling deal that’s already on the books (as I understand it, Microsoft was already selling ads on Facebook for users in the U.S., and splitting the revenue with Facebook; now it will sell ads for international users, too. If some enlighted commenter can tell me why Facebook needs M$ to sell ads for it, I’d be quite curious. How hard can it be?) Nobody wanted to dish even the tiniest bit on how the courtship played out, or why Facebook turned down Google and Yahoo.

Two minor notes. The obvious: it takes some stones for Facebook to have turned down Google in this situation. Maybe I’m overly reverent of Google, the way tech journalists often are, but its resume in the online advertising space is just out of everybody else’s league. Expertise is more important than money in this early stage of the game, and $240 million is just not that much money in the grand scheme anyway. Was it just because of the extraordinarily high valuation Microsoft was willling to put on Facebook? Or is there some subtle wrinkle to the (eye-bleedingly boring) online ad game that I’m missing? I’d shoot a man in Reno to know what Google offered.

And the other obvious: wow, do people in Silicon Valley have the hots for Facebook. I mean, I think on some level they actually believe the basic myth of Facebook: that the Internet is heading toward a post-apocalyptic end-state in which Facebook is the dominant social network, having choked off its competitors and subsumed within itself many of the basic functions of the Internet itself as we know it (e-mail and so forth). What else could justify those towering numbers? The attitudes of hushed reverence? The sour flop-sweat on the brows of executives competing for Facebook’s favors? It’s the last chopper out of Saigon! It’s Thunderdome!

Except it probably isn’t. Relax. Now who’s up for a little Scrabulous?