Microsoft Beats Google to 'Pounds 7.5bn' Tie-Up With Facebook

Oct 25, 06:01 PM

Current Headlines: By Simon Duke, Naomi Rovnick

SOFTWARE giant Microsoft has seen off competition from bitter rival Google to purchase a 1.6pc stake in popular social networking site Facebook, valuing it at Pounds 7.5bn.

The incredible deal catapults 23-year-old Harvard dropout Mark Zuckerberg, who started Facebook from his dorm room three years ago to help students make friends, into the big league of computing tycoons.

Zuckerberg is now likely to claim a high entry on the Forbes list of the world's richest people with a fortune worth billions.

The fresh-faced computer whizz has been playing Microsoft and internet search company Google off against each other since July.

For Microsoft - which paid Pounds 120m for the stake - the prize is Facebook's 42m-strong user list, which boasts a veritable who's who of media personalities like Piers Morgan and Jeremy Clarkson. Microsoft will also now sell advertising on Facebook around the world.

Facebook allows subscribers to keep in touch by exchanging messages and photos.

Users don't pay to set up pro- files on the site. Instead, Facebook hopes to make money by selling targeted online ads at its well-heeled subscribers.

It is understood that Zuckerberg turned down offers of around Pounds 800m from Yahoo and Viacom last year.

And his patience looks to have paid off in spades as social networking sites have become the must-have accessory for traditional media companies.

Rupert Murdoch's News Corp is already making money from its Pounds 290m takeover of Facebook rival MySpace in 2005, while Google last year bought online video sharing site YouTube for around Pounds 800.

While Facebook still lags MySpace in user numbers, it is catching up fast. For sceptics, the price tag -- equivalent to around Pounds 120 for each Facebook user -- is very high for what could prove to be a passing fad.

However, with the internet evolving at break-neck pace, technology giants are desperate not to miss out on the next boom area.

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