Microsoft expanded its relationship with Facebook, agreeing to invest $240 million in the social-networking phenomenon and to expand advertising on the site, the companies announced today. Microsoft reportedly beat out Google for a coveted minority stake in the three-year-old startup.

The deal, which has been expected for weeks, expands the existing advertising tie-up between the two companies. Microsoft will now sell international advertising on Facebook.

"We are pleased to take our Microsoft partnership to the next level," said Owen Van Natta, vice president of operations and chief revenue officer at Facebook. 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 the more than 49 million active users of Facebook."

"Making this investment and expanding this partnership will position Microsoft and Facebook to better take advantage of advertising opportunities around the world and is a great win, not only for our two companies, but also for our collective users and advertisers," said Kevin Johnson, president of the Platforms & Services Division at Microsoft.

The Microsoft investment gives Facebook an implied value of $15 billion. Facebook said it expects to earn $30 million on $150 million in revenue this year, according to the Wall Street Journal.

Microsoft's bet is on Facebook's future: The social-networking site continues to experience strong growth both in the U.S. and international markets. More than half of Facebook's users are now outside the U.S., and an average of 250,000 new users sign up each day.

Microsoft and Facebook began their relationship in August 2006, when they announced a U.S.-only deal that made Microsoft the exclusive provider of banner advertising on Facebook. In early 2007, the deal was extended to 2011.

The new agreement comes three weeks after Microsoft chief executive Steve Ballmer suggested that Facebook might be no more than a fad, in a heavy-handed example of negotiation through the press.

Google is reported to have also bid for the Facebook stake, but in the end, Microsoft wanted it more.

It may seem inconceivable that Google could be outbid for anything—it reported $14 billion free cash on its earnings call last week. Its reluctance to proffer a winning bid may reflect its forthcoming plans to bolster its own social networking-site, Orkut.