Microsoft did try to buy Facebook after all, as admitted by a company exec at the Le Web conference recently. But Steve Ballmer’s $15 billion offer was turned down flat by Mark Zuckerberg.
Many people would describe Microsoft as a fading giant, one with its glories well and truly behind it. I think that’s unfair because Microsoft is still a huge company, massively profitable, and with a core product line that will likely stay relevant and worthy for the foreseeable future. However, maybe its days of being an innovator are gone.
Facebook, on the other hand, is a veritable youngster compared to Microsoft. But it’s a company that is on the up and up, with no sign of its progress halting any time soon. Sure, its product may not be as legitimate as say Windows or Office, but it’s making money out of people making friends. And that’s making its founder and CEO Mark Zuckerberg very wealthy indeed.
With all that in mind, it’s intriguing to learn that Microsoft actually tried to acquire Facebook back in 2006/2007. This was first revealed in David Kirkpatrick’s book The Facebook Effect, but until now has remained unconfirmed. The two-paragraph anecdote from the book reads:
Microsoft CEO Steve Ballmer had flown to Palo Alto to visit his young counterpart twice. As Zuckerberg is wont to do, he took Ballmer on a long walk. Zuckerberg told Ballmer that Facebook was raising money at a $15 billion valuation. But Ballmer had come with something more sweeping in mind. ‘Why don’t we just buy you for $15 billion?’ he replied, according to a very knowledgeable source. Zuckerberg was unmoved even by this offer. ‘I don’t want to sell the company unless I can keep control,’ said Zuckerberg, as he always did in such situations.
Ballmer took this reply as a sort of challenge. He went back to Microsoft’s headquarters and concocted a plan intended to acquire Facebook in stages over a period of years to enable Zuckerberg to keep calling the shots. But Zuckerberg rejected all the overtures. What Ballmer finally agreed to instead was an advertising deal that included a provision for Microsoft to pay a huge amount, $240 million, for a sliver of Facebook, 1.6 percent. Microsoft’s investment gave Facebook an implied value of $15 billion.
However, according to TechCrunch, Microsoft Senior Director of Corporate Strategy and Acquisitions Fritz Lanman admitted this was true (at least the attempt to acquire, if not this account in full) at Le Web by saying, “Yeah we tried to acquire Facebook. Facebook had a lot of similarities to Microsoft back in the day.”
He went on to suggest that Facebook (currently valued at around $50 billion) could be worth more than Microsoft one day. And I don’t doubt that for a second.