Microsoft Corp is in talks to buy up to 5 percent of Facebook in a deal that could value the fast-growing online social network company at $10 billion or more, the Wall Street Journal reported on Monday.
The move could give maturing Microsoft more access to young users and let Facebook get closer to a major software maker at a time when its growth is increasingly tied to a proliferation of small applications from independent developers on its site.
Citing people familiar with the matter, the Journal said the world’s largest software company sought to buy a stake of up to 5 percent in Facebook for $300 million to $500 million.
Facebook, led by its 23-year-old founder and Chief Executive Mark Zuckerberg, may insist on a valuation as high as $15 billion and is considering raising up to $500 million in cash to expand its operations, according to the Journal.
Such a deal could help Microsoft better compete against Web search leader Google Inc for a growing base of online advertising and put one of the Internet’s hottest names in Microsoft’s camp.
Facebook, which already has an advertising deal with Microsoft, would benefit from closer ties with developers as it seeks to turn its site into a full-fledged Web platform where users can play games, interact and read news about each other, said Forrester analyst Charlene Li.
“If you are building a business around building a platform there is one company that has done it better than anybody else — and that is Microsoft,” she said. “People have been just assuming that Google would be the best partner and that is not necessarily the case.”
Google has also expressed an interest in investing in Facebook, the Journal report said.
“It would probably be pretty good for Microsoft since it has not had the best success in creating really hip, young-people-grabbing stuff on the Web,” said Kim Caughey, a senior analyst at Fort Pitt Capital Group, which oversees more than $1 billion, including Microsoft shares, for clients.
Representatives for Microsoft and Facebook declined to comment.
Zuckerberg has repeatedly said his company wants to remain independent and is seen as preparing to float itself on the stock market eventually.
Facebook has grown to 39 million members, up nearly 63 percent from 24 million in late May, and is quickly gaining ground on larger rival MySpace, which was taken over by News Corp in 2005 for what is now seen as a bargain price of $580 million. MySpace has more than 200 million users.
Facebook’s explosion popularity has also drawn increased scrutiny, including a 50-state investigation into the company by attorneys general concerned about Web sexual predators.
New York Attorney General Andrew Cuomo said on Monday his office had subpoenaed Facebook and accused it of not keeping young users safe. Facebook said it was preparing a statement about the issue.
Redmond, Washington-based Microsoft already has an exclusive agreement until 2011 to broker display advertisements for Facebook. The Journal said Microsoft and Facebook are discussing expanding that agreement beyond the United States.
After relinquishing an early advantage in the lucrative paid search market to Google and Yahoo Inc, Microsoft is trying to catch up by clinching deals to broker display advertising to some of the leading names in “Web 2.0.”
Yahoo and Google are also maneuvering. Earlier this year, for instance, News Corp chief Rupert Murdoch said he had discussed swapping MySpace for a 25 percent stake in Yahoo.
Web 2.0 is a catch-phrase for a new generation of Internet services that run on interactive software and typically rely on content generated by users to attract more visitors. Microsoft also has an agreement with popular news site Digg.com.
Microsoft shares rose 1.5 percent to $29.08 on Nasdaq.
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Wikipedia, the online encyclopaedia compiled by computer users, is to stop people from editing entries after a series of questionable updates cast a shadow over its accuracy and reliability.
Ordinary users will no longer be able to edit information and to see those changes appear instantly on the screen.
Under plans being considered they will have to submit changes to a team of “trusted editors” who would then decide whether to update the entries.
The move follows complaints that the site is open to abuse from individuals and organisations wanting to slander their rivals or competitors.
Under the current system, anyone can edit an entry at any time, which means that people often post inaccurate and sometime malicious information.
There have already been some highly embarrassing changes.
Employees of the CIA have been found altering the biographical information on former presidents including Ronald Reagan and Richard Nixon.
A worker at Millbank, the Labour Party HQ, was also found to have tweaked an entry on Labour Students to remove suggestions the group was being overtaken by careerist politicians at the expense of grassroots radicals.
Under the proposed changes, a group of editors will moderate the entries and decide what should be posted.
These trusted editors will have to have proved their commitment to Wikipedia by posting 30 reliable changes within 30 days.
The German-language version of the site has been chosen to test the changes first because of its high regard for accuracy, but if the feedback is positive they might also be applied to the English-language one.
Wikipedia, the internet’s most popular encyclopaedia, has become an online phenomenon since it was launched six years ago.
Seven per cent of all internet users now visit the site every day.
“The changes could help transform the encyclopaedia from a rough guide into a trusted authority. But they might also erode the very freedoms that encourage people to contribute to the encyclopaedia in the first place,” said Jim Giles, from the New Scientist magazine.
The changes would also alter the ethos surrounding Wikipedia where everyone should be free to contribute to the creation of the encyclopedia.
David Gerard, a Wikipedia spokesman, said that the Wikipedia Foundation was discussing ways to make the site more reliable.
“Depending on how the trial goes, we will consider applying them to the English-language version,” he said.
People making malicious changes to entries face being caught by a new device, the WikiScanner, which allows users to trace the source of millions of changes to entries, even those done anonymously. The scanner has unearthed a host of entry fiddling ranging from the Vatican to Disney.
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Starbucks Corp. plans to give away 50 million free digital songs to customers in all of its domestic coffee houses to promote a new wireless iTunes music service that’s about to debut in select markets.
From Oct. 2 to Nov. 7, baristas in the company’s more than 10,000 U.S. stores will hand out about 1.5 million “Song of the Day” cards each day. The cards can be redeemed at Apple Inc.’s online iTunes Store.
Thirty-seven artists with featured songs include Paul McCartney and Joni Mitchell — the first two to sign on with Starbucks’ Hear Music label — along with Joss Stone, Dave Matthews, John Mayer, Annie Lennox and Band of Horses.
The first song will be Bob Dylan’s “Joker Man.”
Also on Oct. 2, Starbucks will start selling iTunes digital release cards that allow a full album of music and bonus material to be downloaded online. KT Tunstall’s “Drastic Fantastic” and the soundtrack to the film “Into the Wild” with new music from Pearl Jam frontman Eddie Vedder will be the first two featured albums, retailing for $14.99 and $11.99, respectively.
Starbucks also will offer a limited-edition reloadable purchasing card that includes two free iTunes downloads when customers register their cards online.
Earlier this month, Starbucks and Apple announced a partnership that will allow users of Apple’s iPhone and new iPod Touch to download songs playing in a Starbucks shop directly to their portable devices.
The coffee chain’s icon will light up on the iPhone or Touch whenever a user is within range of a Starbucks shop’s Wi-Fi signal. People with the devices — or a laptop with iTunes software — will also be able to use the signal for free to browse and buy other iTunes music.
The service will launch at 600 Starbucks shops in Seattle and New York on Oct. 2, then roll out in San Francisco in early November.
Starbucks plans to have the service up and running in a quarter of its stores by the end of next year and in all U.S. stores with wireless networks by the end of 2009. There are no immediate plans to expand the service to international markets.
Starbucks has been selling CDs in its stores for years and added its music catalog to iTunes last fall.
Ken Lombard, president of Starbucks’ entertainment division, declined to release any specifics on the company’s digital music sales so far or compare how they’ve been stacking up to CD sales. He would only say that music in both formats has been selling well.
Expectations remain high for the upcoming wireless service. “We’re going to see huge improvement in terms of the amount of tracks” that are downloaded, Lombard said.
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