Microsoft is in talks to buy up to 5 per cent of Facebook in a deal that could value the online social network company at $10 billion or more, the Wall Street Journalreported today.
The Facebook homepage, which has overtaken MySpace to become the UK's most popular social networking site. Image: PA.
The move could give Microsoft more access to young users and let Facebook get closer to a major software maker at a time when its growth is increasingly tied to a proliferation of small applications from independent developers on its site.
The Journalsaid the world's largest software company sought to buy a stake of up to 5 per cent in Facebook for $300 million to $500 million. Facebook may insist on a valuation as high as $15 billion and is considering raising up to $500 million in cash to expand its operations, according to the Journal.
Such a deal could help Microsoft better compete against Web search leader Google for a growing base of online advertising and put one of the Internet's hottest names in Microsoft's camp.
Facebook, which already has an advertising deal with Microsoft, would benefit from closer ties with developers as it seeks to turn its site into a full-fledged Web platform where users can play games, interact and read news about each other, said Forrester analyst Charlene Li.
Google has also expressed an interest in investing in Facebook, the Journalreport said.
Facebook's explosion popularity has drawn increased scrutiny, including an investigation into the company by US attorneys general concerned about sexual predators.
New York Attorney General Andrew Cuomo said yesterday his office had subpoenaed Facebook and accused it of not keeping young users safe. Facebook said it was preparing a statement about the issue.