Microsoft turns its attentions to Facebook

After abandoning its plans to purchase Yahoo, Microsoft has now turned its attentions to social networking site Facebook, reports the Wall Street Journal.

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After abandoning its plans to purchase Yahoo, Microsoft is reportedly sniffing around social-networking site Facebook as a possible acquisition target, according to a report in the Wall Street Journal.

Neither company would comment on the rumour, and the Journal reported there are no active talks between the two.

Microsoft already owns a 1.6 percent stake in Facebook following an investment of $240m (£120m) last year, but analysts aren't convinced that acquiring the website would give a sufficiently large boost to Microsoft's online efforts to make the deal worthwhile.

Microsoft CEO Steve Ballmer and Bill Gates, chief software architect, have been quoted in the past week saying Microsoft would focus on an independent strategy and won't be replacing the failed Yahoo bid with other acquisition efforts.

Mark Zuckerberg, CEO and founder of Facebook, has been steadfast in his refusal to sell the website he began in 2004 that now has 70 million users.

A recent profile in Time magazine, which named him one of its 100 most influential people, said Zuckerberg, 23, remains "true to his vision, focusing on building a community rather than on a mere exit strategy - which is why those buyout offers have been declined."

Ironically, one of the spurned suitors was Yahoo, which made a US$900 million bid for the company in 2006. That same year, Zuckerberg turned down $750 million from Viacom, asking instead for $2 billion. The following year, Microsoft invested $240 million in the company, which then was valued at $15 billion.

Microsoft entered into a strategic alliance with it in August 2006, an exclusive deal to sell display advertising that runs until 2011. "

"Facebook is another property in which Microsoft can sell adverts, but it doesn't move the ball toward the goal line in terms of competing with Google," Rob Helm, director of research at Directions on Microsoft, told Forbes.com.

According to Rebecca Jennings, an analyst with Forrester, Microsoft and Facebook have "fundamentally different cultures".

"Facebook was set up primarily as a services business, whereas Microsoft's origins are as a software and technology company," she told The Times.

If Microsoft does push forward with this deal, it will face opposition from Facebook's thousands of members. At least five Facebook groups have already been set up in protest against the merger, including If Facebook sells to Microsoft, we're leaving and Don't sell Facebook to Microsoft!

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