• The Wall Street Journal, Tuesday, September 25, 2007 10:30 AM

Microsoft Corp. is in talks to buy a minority stake in social network Facebook, a sign of a new urgency to jump-start its online business at a time when Google Inc. is leading the Internet-advertising business. Microsoft proposals could value the fast-growing site at $10 billion or higher. If those talks bear fruit, Microsoft could purchase a stake of up to 5% in the closely held startup, at a cost in the range of $300 million to $500 million. But Microsoft must first muscle out Google, which has also expressed strong interest in a Facebook stake.

Along with Google, Time Warner Inc.'s America Online unit, Yahoo! Inc. and others, Microsoft is racing to establish a "platform" -- in this case, a single system through which advertisers can buy ads that appear on sites and Web publishers can tap for ads to appear on their sites. That approach has taken on added importance as users and advertisers increasingly spend time and dollars on sites other than the big, established Web portals.

The existing deal is expected to bring in about $75 million for Facebook this year and a total of at least $200 million to $300 million through 2011. The actual numbers will depend on Facebook's traffic growth and other factors. The existing agreement covers only the U.S. and expires in 2011, but the companies are discussing whether to extend it for a longer period and expand it beyond the U.S.

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