Microsoft and Google face off?

25 Sep 2007

With Google as reigning online advertising juggernaut Microsoft is reportedly looking to hitch a ride with the social networking site Facebook and its fast-growing user base according to the Wall Street Journal.

After spending US$6bn on Seattle-based online advertising firm aQuantive back in May, it looks as if the Redmond-based tech titan is serious about increasing its revenue in this area.

“Microsoft is making a big play into the online advertising market, clearly they are trying hard to compete against Google,” said David Bradshaw, principal analyst at IT and telecoms research firm, Ovum.

“Microsoft is changing its business model, introducing what is called syndicated ads, which is what it would be using on the Facebook site.”

The company is rumoured to be looking for a 5pc stake in Facebook, a move that could apparently send Facebook’s value soaring up to US$10bn.

Microsoft has previously been rumoured to have had an interest in acquiring Yahoo! back in May, though this deal was not made between the two organisations.

However there is definitely smoke around the alleged Microsoft/Facebook talks according to Bradshaw, and if they are indeed in serious talks then the possibility of it going through is likely.

Bradshaw noted that Microsoft hasn’t got the same web presence as Google but looking to the aQuantive deal, it seems that attaining this presence costs a lot of money and Microsoft is willing to spend it.

Social networking sites are good areas to invest in advertising and currently Facebook is gaining momentum faster than others.

“Facebook is hotter property than MySpace. It would be very surprising if people weren’t flitting around it, both old media and new media,” said Bradshaw.

By Marie Boran