And so the stakes get even bigger. Now Microsoft has outbid Google for buying a stake in social networking site, Facebook.
The figures involved are simply staggering.
Microsoft forked out $240 million, and for its money acquired a tiny 1.6 per cent stake. To put that in context, when Rupert Murdoch bought MySpace two years or so ago, he spent $580 million - and for that he got the entire shooting match.
As of today, Facebook is yet to make a profit.
It’s not even number one in its market of speciality. MySpace, with 107 million users, has more than twice as many users. But then Facebook is growing faster - it expanded its user numbers by 6 per cent in September, compared with just 1 per cent for MySpace.
Even so, Microsoft’s move seems to be built on a wing and a prayer.
Microsoft, Google and little Yahoo are clambering over each other to grab a bigger slice of the advertising cake. Social networking is the next thing. None of the big boys seem to know how to originate a product that can compete in this market - so they are buying-in, making very rich men of the social networking pioneers, people like Mark Zuckerberg, who set up Facebook as a wheeze to fund a holiday for himself and his mates.
For Microsoft, this is a massive challenge. Google funds everything with advertising - Microsoft has been built on the foundation of charging for its software. It is being forced to change track. Over the next few years it is quite possible that its established revenue model will implode - will it be able to adjust?
Buying a 1.6 per cent stake in Facebook seems to be little more than the faintest whistle in the wind of change. That it forked out just shy of a quarter of a billion dollars, shows how desperate it is.
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