jul 17, 2012 - Facebook (and Microsoft) vs. Google

Description:

As Facebook inches toward an I.P.O., it’s Google’s turn to feel the sting of a younger competitor passing a key milestone that will fill its war chest and, if history repeats itself, lead to a new wave of battles over the Internet. Google has already moved forcefully into Facebook’s home turf of social networking with Google Plus.

There is speculation that Facebook, as it grows in size, will not be able to ignore the huge search advertising market for long and will be drawn into creating a search engine that more directly competes with Google.

As the rivalry between Facebook and Google intensifies, Microsoft has chosen to get steadily cozier with Facebook. Facebook and Microsoft are collaborating on Internet search, employing the gobs of user data generated by members of the social network to improve searches on Microsoft’s Bing.

And Microsoft stands to become a more direct beneficiary of the Facebook I.P.O. because of an investment it made in the social network in 2007, when the company was valued at a mere $15 billion. (It is expected to fetch a market value of more than $100 billion through the I.P.O). According to a Facebook filing with securities regulators, all of Microsoft’s current holdings in Facebook will be worth $1.23 billion if Facebook shares begin trading at $38, the high-end of the company’s estimates for its debut price.

Microsoft, though, plans to sell about $250 million worth of its shares in the I.P.O., leaving it with a stake worth about $1 billion at Facebook’s debut price, according to the filing.

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