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Microsoft considers investment in Foursquare, says report

The social network that centers around places is soliciting bids from large technology companies including Microsoft, reports Bloomberg.

Foursquare CEO Dennis Crowley discusses the future of location at SXSW.
James Martin/CNET

Microsoft and other large technology companies are said to be exploring a stake in Foursquare though a strategic investment, according to Bloomberg. Foursquare and Redmond-based software giant are in late-stage discussions but a deal is not yet certain, sources told Bloomberg.

The social network that centers around places is doing better than expected on the revenue front, putting it in a position to not only garner a substantial investment from a tech titan or two, but also negotiate equity terms with investors in its $41 million debt round, according to the report.

Foursquare declined to comment.

"I think we've proven our business model," said Steven Rosenblatt, chief revenue officer at Foursquare, in a prior interview with Bloomberg. "Our business model is very clear and it's working, doing what we thought it would do, if not more. It's all well ahead of what we anticipated."

Even so, the 4-year-old company is still in the early stages of its biggest advertising push. In July, Foursquare started showing advertisements dressed up as coupons and deals to some users after they checked in to partner venues. Since then, the units, aptly named post check-in ads, have been rolling out to more of Foursquare's 35 million users.

Earlier Thursday, Foursquare also forecasted its future potential with a limited Android release of new version of its application that uses passive location to deliver proactive recommendations. The features work behind-the-scenes to push the right tips at the right time. CEO Dennis Crowley told CNET that he eventually hopes to incorporate advertising into the process.

"It's inevitable that pieces of software like this will be able to offer people discounts for either going to certain places or if it's their very first time at a certain place," Crowley said.

As for Microsoft, the company may be looking to repeat history by taking a stake in Foursquare. In 2007, Microsoft famously invested $240 million for a 1.6 percent stake in Facebook, a risky bet at the time that has paid off handsomely. But Foursquare, which has struggled to gain mainstream adoption, is far from a sure thing.