Numerous disparaging articles point to the “bubble deal” over Microsoft’s recent stake in Facebook. The naysayer’s have a point; however, they are missing the main reason for the investment—to one-up Google.
Google is advertising on the internet. Seriously, the company is a force with no end in sight. They continue expanding into different markets with ease. This deal is a success for Microsoft because they are tired of losing the internet battle to Google. From this standpoint, the strategic investment by Microsoft in Facebook makes perfect sense to me.
Did they pay overpay? It’s tough to tell. I wasn’t in the negotiation following their logic. However, I’m sure the main motivation for paying $240 million was simply to oust Google; not to mention the long term advertising deal.
Is this the AOL + Time Warner bust all over again? I highly doubt it, but time will tell if the investment actually pays off.