Microsoft`s $240 million investment in Facebook gives the local operation an ideal platform to penetrate the South African online advertising space, says Microsoft SA.
David Ives, the company`s director of developer and platforms group, says: "For Microsoft SA, the international investment in Facebook makes sense. It provides us with a vehicle to an untapped market and a new sales channel online."
Facebook`s South African network has over 400 000 users.
Microsoft SA says it intends to leverage the exclusive advertising rights as a means to access both international and local advertising spend.
According to Ives, it will also provide a gateway for Microsoft`s associated services to become more visible. "Our free e-mail service on Live, and maybe in the future an online Office suite, can only be enhanced by the deal."
The agreement, announced last week, sees Microsoft gain a 1.6% stake in the social networking site. The investment by Microsoft values Facebook at around $15 billion.
Shifting ideals
The expected downstream from advertising for both companies and individuals to start using Microsoft-related products can only boost the company`s presence locally, explains Ives.
"We are still waiting to see how the investment will cascade down to the local market, but there is definitely potential to start with targeted advertising, which is an opportunity in and of itself."
Colin Daniels, digital business development manager at Johncom, says Microsoft`s stake in Facebook is a smart move. "The company is shifting its business model to take on the online advertising platform, which has traditionally been Google`s domain."
He says it provides Microsoft with a new competitive space. "At the end of the day, it`s all about competing effectively. Microsoft is looking for a piece of the online pie."
Ives says the company has no plans to increase its investment in Facebook. "You have to remember that we have invested based on an estimated future market value. Nothing is 100% secure."
Under fire
Several local Facebook users have expressed concern as to how much profile information the deal allows Microsoft to access.
Daniels says the unease stems primarily from techies or technologists, and mostly by those who have an inherent hatred for Microsoft.
However, Ives says the deal does not afford Microsoft access to user information. "What information we will get is location-based, and even then it will be primarily obtained from service providers. There are protection rights in place for this information, and users should know that these will be upheld."
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