Google is threatening to once again beat rival Microsoft to the deal punch, this time in the white-hot Facebook investment sweepstakes.
Microsoft and Google are each vying to take a stake of between 5 percent and 10 percent in Mark Zuckerberg’s social-networking site, with a deal expected to be announced in the next 24 to 48 hours, according to three sources familiar with the situation.
Google, in keeping with its past modus operandi, has been trying to drive the price up to a point that would scare away Microsoft. Running point for the Internet giant in its talks with Facebook is Tim Armstrong, the same executive who helped Google elbow Microsoft out of a deal with AOL similar to the one being talked about with Facebook.
This time around, however, Microsoft is hanging tough, despite recent comments by CEO Steve Ballmer that social-networking sites were “a bit faddish.” One source said the Redmond, Wash.-based company is “willing to give any valuation possible” to keep Facebook away from Google.
Facebook’s investors, which include Accel Partners and Greylock Partners, are looking for a pre-money valuation of $10 billion-$15 billion in any deal. On the high side, that means Microsoft or Google would have to come up with $1.5 billion for a 10 percent stake or $750 million for a 5 percent piece
Though both companies could afford to pony up that money on their own, neither is likely to do so, with one source saying an outside financial player will likely be brought in to help sell the round.
At stake is not just a seat at Facebook’s table but also hundreds of millions of dollars in potential advertising revenue. Sources said if Google emerges victorious one of the first things the company is likely to do is unwind Microsoft’s advertising deal with Facebook. Conversely, if Microsoft wins, it will likely look to expand that agreement.
Facebook is currently searching for a way to monetize that traffic on its site, with the company planning to make an online advertising announcement on Nov. 6.
Representatives for Microsoft, Google and Facebook all declined to comment.