Microsoft has recently lost out to Google on several opportunities, AOL and MySpace, to provide advertising on high profile sites. These types of deals are critical to Microsoft's ability to create a viable alternative to Google's AdSense. They need high quality and high volume advertising slot to attract advertising to their ad platform. It's a chicken and egg problem.
I actually think this is a great win for Microsoft. FaceBook seems a lot 'smarter' than MySpace, e.g., FaceBook provides APIs shortly after MySpace screws the eco-system. Smart. Very Smart. Overall, I think FaceBook will continue to grow.
Here is some coverage from elsewhere in the blogosphere:
"Microsoft and Facebook say that talks only picked up in the last week, no doubt taking on an air of importance after the MySpace deal. In fact, Facebook’s entire business strategy seems to be to point to MySpace and say, “Hey, we deserve that, too!” After MySpace was bought for $500 million and started to look like a bargain, Facebook reportedly pointed to that and claimed it deserved no less than $2 billion. Of course, thanks to this ad deal, Facebook might not need to be bought by anyone anymore (and MySpace is looking mighty stupid for selling out as early as it did)."
Don Doge on The Next Big Thing
"Financial details were not disclosed but Microsoft VP Steve Berkowitz said “not comparable to the MySpace deal because we focused on the right economics for both parties.’’
FaceBook COO said Owen Van Natta said Facebook chose Microsoft because the company’s technology and approach are a better fit. 'We think they have a real understanding of the need to take a fresh approach to advertising and social media.'"