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Microsoft and Facebook: A Coup for Developers?

Microsoft yesterday announced that it will take a $240 million equity stake in social networking service Facebook, giving Redmond a key conduit to grow its online advertising efforts. The deal also gives tacit credence to Facebook as a platform for .NET developers.

The two companies played down the potential synergies for developers during a call yesterday for investors. The deal makes Microsoft the exclusive advertising platform for Facebook.

Although the two companies said they are not disclosing all terms of the agreement, observers need look no further than the fact that Facebook has already released its APIs, and Microsoft last week released the beta for its Popfly tool, which among other things is a Silverlight-based mashup tool that can be used to build Facebook applications.

Microsoft also has a Visual Studio toolset that can be used to develop Facebook apps. "You can certainly look at what we are doing together and the things we've done around some of the Live platform APIs that we’ve exposed and the way those are being used in Facebook," said Kevin Johnson, president of Microsoft's platforms and services division, speaking on yesterday's call.

"This advertising relationship is expanding globally," he added. "I would say you need to sit back and watch how this partnership develops."

Microsoft's public position regarding Facebook had been mixed in recent months. Despite ties between Microsoft and Facebook, CEO Steve Ballmer earlier this month had described Facebook as a fad, remarks he toned down in recent weeks.

Social networking is on the cusp of changing how many in organizations interact.

For Microsoft, the investment in Facebook, which values the social networking service at $15 billion, is a major coup because arch-rival Google reportedly also had an interest in Facebook. In the end, Facebook officials said it made more sense to further its ties with Microsoft.

"We've been working with Microsoft for over a year now and it's a relationship that's been really great for both of us," said Owen Van Natta, Facebook’s chief revenue officer. "Being a technology company, which is the way we certainly view ourselves, being able to deepen the partnership with one of the greatest technology companies on the planet, absolutely made sense to us."

About the Author

Jeffrey Schwartz is editor of Redmond magazine and also covers cloud computing for Virtualization Review's Cloud Report. In addition, he writes the Channeling the Cloud column for Redmond Channel Partner. Follow him on Twitter @JeffreySchwartz.

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