Microsoft: Still No Facebook Insider

What is Microsoft meant to do with its 1.6% stake in Facebook? While it's easy to get excited about the implied $15 billion valuation for the the social-networking company and start talking about Mark Zuckerberg's multi-billionaire status, the fact is that $240 million is not an enormous amount of money for a company the size of Microsoft, and the investment probably makes more sense on a strategic level – giving Redmond control of Facebook's banner advertising for the foreseeable future – than it does on a valuation level. After all, it's more or less unthinkable that Microsoft would ever want to sell this 1.6% stake.

But the fact is that Microsoft has much bigger ambitions in the internet space than being a glorified ad-sales company, and it doesn't seem that this 1.6% stake gives it much if any control over one of the web's hottest properties. As Brad Stone reports,

A person briefed on the discussions said Google had dropped out not because of the financial terms, but because the proposed deal did not give it enough say in the development of their joint advertising efforts.

Facebook remains a closely-held and tightly-run ship, with no real need or desire for outsiders to muscle in on its business plan. That's why Google ultimately dropped out of the bidding, it would seem, and that's why Microsoft still has very little in the way of online strategy, even after this deal has been signed. I suspect it's also why the deal was for only 1.6% of Facebook, rather than the initially-reported 5-10%. After all, if you're not going to get any real control or insider status, you may as well keep your investment on the small side.

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