Source: Microsoft wins Facebook bid battle

The deal is expected to include a stake in the company and an expansion of the software maker's advertising deal with Facebook, which currently only covers the U.S.

Update: 12:30 p.m. see bottom.

After weeks of speculation, Microsoft appears to have won a battle with Google over who would get a stake in Facebook, according to a source familiar with the situation.

Microsoft and Facebook were close to a deal, according to the source. Exact details were not immediately available, but the deal is expected to include at least an ownership stake in Facebook and an expansion of Microsoft's current Facebook advertising deal, which only covers the U.S.

Google and Microsoft had both been said to be bidding hard for a deal with fast-growing Facebook. The move, while expected to be pricey for Microsoft, could give its online services push a much-needed boost. The company has lost out on other high-profile deals, including MySpace and has struggled in its bid to gain market share in the core search business.

Earlier on Wednesday, Facebook confirmed it would have some major advertising-related news in the coming weeks. The New York Post had reported earlier in the day that the Google and Microsoft were in a down-to-the-wire battle over the stake, with a deal expected within 24 to 48 hours.

A Facebook representative was not immediately available for comment.

Update 12:03 p.m.: Valleywag added its own brand of confirmation, noting that Facebook PR representative Brandee Barker just added Microsoft PR person Adam Sohn as a friend on her Facebook page.

Update 12:30 p.m.: Piper Jaffray analyst Gene Munster said that the deal, if finalized, would give Facebook the cash they need to get to the next level and allows Microsoft to send a message.

"They've been beaten by Google since the beginning of time," Munster said. "They may want to make a statement that they aren't going to sit on the sidelines."

News.com's Elinor Mills contributed to this report.

About the author

    During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina.

     

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