Microsoft invests $240m in Facebook stake

Microsoft has acquired a 1.6% stake in social networking site, Facebook, for $240m.

Google was also hoping to secure a stake in the company, but its offer was turned down.

Under the terms of the deal, Microsoft also gains the exclusive right to sell internet ads for Facebook outside the United States, as well as banner advertising and links on its US site.

Mark Zuckerberg, Facebook’s founder, is expected to launch an initial public offering, but says this will not happen for at least another two years.

Facebook allows people to set up personalised web pages and communicate with each other, and also allows outside developers to create games and other applications for the site.

The site hopes to significantly increase its current user base of around 50 million, making it an attractive proposition for advertisers, particularly as users tend to enter a lot of personal information, which could potentially help advertisers target their ads on individual preferences.

The acquisition could significantly strengthen Microsoft’s position in the $40bn advertising market, which is expected to double in size within three years. It follows the earlier acquisition of digital advertising firm, aQuantive, for $6bn.