Facebook launches Mobile, Takes $240 Million Investment from Microsoft

Microsoft (MSFT) has invested $240 million in Facebook at a valuation of $15 billion and gets the rights to sell third-party ads on the Facebook network. That’s about 2 percent stake. Not as crazy as the $900 million that MySpace (NWS) pried out of Google (GOOG), but still pretty steep. I thought the deal was for $500 million, so I am guessing there is another shoe to drop here. (Looks like Microsoft is going to be to Facebook what Yahoo was for Google….transition strategy!)

Today Facebook also launched an application for BlackBerry, and got RIM and T-Mobile USA on stage with Facebook co-founder Dustin Moskowitz to announce it today. Facebook already has an iPhone app that early adopters everywhere love to brag about. Moskowitz also announced the Facebook platform was expanding to all web-enabled phones, with apps appearing on mobile Facebook profiles and getting access to SMS to communicate with users.

Press call live blogging below the fold:

* The call was supposed to start at 2 pm, its already 2.04. Bad muzak playing!
* Mark Zuckerberg , if you want to play Steve Jobs, learn to be punctual like Steve.
* Maybe they are getting their stories right, and haven’t figured out how to put the obscene finger gesture to Google in polite/politically correct language.
* 2.10 pm, and still terrible music and no sign of anyone.
* 2.12 pm: It’s on. Vivek Verma and Kevin Johnson, president of the Platforms & Services Division at Microsoft, are on the call. Brandee Barker (spokesperson) and Owen Van Natta, vice president of operations and chief revenue officer at Facebook. are on the call.
* Mark is beyond all these PR things ;-) He got peeps it seems who are handling this!
* There is an error in the press release, and will be reissued.
* Owen is speaking. He is saying stuff which could be spoken by any executive on any conference call.
* Kevin – major win for Microsoft in advertising and strong signal from our biggest partner. Facebook is a strategic win for us. We are very pleased with the depth and the scope of this deal. Seems like Facebook is going to work on newer ads for social environment.
* Kevin says the equity stake is a strong statement of confidence in this partnership. Blah blah! 200 million users is in realm of possibility and combine that with monetization opportunity.
* Kevin – there are certain elements we won’t disclose about this deal. We have strong alignment around technology. Lot more we will do together.
* Owen says: lot of folks wanted to partner with us over advertising, and relationship has been great for us. We are now expanding our relationship beyond U.S. borders.
* Owen says: no restriction on 3rd party developers. I think they can tap into Microsoft ad center and other technologies.
* (Arrington asks) Any other investors in this round? Not announcing any other investors in this round for now. Just Microsoft.
* Kevin says – we are expanding our advertising relationship internationally and that is what we are announcing right now.
* In response to Josh Quittner’s question about who else were they talking to, Owen says not commenting on who were others they were talking to.
* Owen says lot of rumors about financing but this is the best set of terms we came up with this deal.
* Not talking about Facebook IPO.
* Is this deal just for banner ads? Will it be expanding to Internet Search deal and will it be separate deal? We are not announcing anything related to Web Search. This is only about advertising.
* Question Mine: Kevin Johnson (what we are seeing so far) we continue to see monetization which continues to improve. We will drive hire. Continues to improve… both parties are not disclosing the metrics. Part two – in terms of what we are using the capital for, our innovation and growth we are seeing today. Expanding our employee base. 700 employees in 2008 (wow). International growth and there is a lot of technical infrastructure we can build around the. Allow people to experience better Facebook. (I will expand on this point later)
* Building your own (FB) salesforce? Microsoft is an exclusive advertising platform partner. The two companies work together today and going forward – there are different needs advertisers have. Socialization of the Internet needs innovation.
* Does Microsoft have access to Facebook user data? User trust is core to what we focus on and we both are going to provide highly relevant advertising and focus on that. We don’t want to violate user trust…There are certain parts of the partnership we are not announcing. I think they are dodging a very relevant question.

Hitwise just sent me over some data that helps put the deal in perspective. According to the Internet monitoring firm, for the week ended 10/20/07:

*Facebook.com was the 9th most visited web site in the U.S., with .96 percent of all Internet visits.

*U.S traffic to Facebook.com has risen 102 percent year-over-year when compared with the week ended 10/21/06.

*Among a custom category of leading social networking web sites, Facebook.com received 15 percent of U.S. visits, putting it at No. 2 behind MySpace.com, which received 76 percent. Windows Live Spaces received 0.4 percent.

*Facebook.com received 9.9 percent of its U.S. traffic from search engines. Of that traffic, MSN Search and Live Search combined for .46 percent to Facebook.com. Google sent 6.82 percent of U.S. traffic while Yahoo! Search sent 1.34 percent of traffic.

*U.S. visits for Facebook.com among users ages 35 and over have increased 19 percent when compared with the week ended 10/21/06.


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