Microsoft wins 1.6% share of Facebook, advertising rights

CAMBRIDGE, Mass. – The brainchildren of two of Harvard University’s most famous dropouts – one conceived more than three decades ago, the other three years ago – united Wednesday in a deal that places a $15 billion value on an online experiment launched from a Kirkland dorm room. \nMicrosoft announced Wednesday it would invest $240 million for a 1.6 percent stake in Facebook, putting an end to a bidding war over a share in the popular social networking site. \nMark Zuckerberg, formerly of the class of 2006, founded Facebook in 2004 with $1,000 in start-up money and dropped out of Harvard his junior year to run the company full-time. He currently maintains 20 percent ownership of the company, giving him a theoretical net worth of $3 billion. \nAfter founding Facebook, Zuckerberg strove to maintain the site’s independence, saying he was not looking for investors. \n“I would just rather be dependent on ourselves,” Zuckerberg told The Harvard Crimson in 2005. “Most businesses aren’t like a bunch of kids living in a house, doing whatever they want, not waking up at a normal time, not going into an office, hiring people by, like, bringing them into your house and letting them chill with you for a while and party with you and smoke with you.” \nThe deal also represents a victory for Microsoft, founded in 1975 by Harvard dropout Bill Gates, over rival firms Google and Yahoo, which also sought to work closely with Facebook.\nAs part of the arrangement, Microsoft won the position of “exclusive third-party advertising platform partner for Facebook,” according to a statement. The company will now sell the banner ads appearing on Facebook outside of the United States and will share the revenue generated by that advertising. \nLast year, Microsoft contracted an agreement to run banner ads on Facebook in the United States through 2011. \n“Microsoft has a lot of cash. Facebook has enormous growth prospects. It’s a smart investment deal from both sides,” said John G. Palfrey Jr. ‘94, the executive director of Harvard Law School’s Berkman Center for Internet & Society. “Microsoft has been much more wealthy in terms of cash than in terms of new ideas for a while, so I think it’s great news for them that they’ve been able to tap into the social movement that Facebook represents.”