Ballmer - Facebook Stake Not A Mistake

Microsoft CEO Steve Ballmer said on Monday his firm's investment of $240M for a 1.6% stake in Facebook was not a mistake.

"We didn't make a mistake," Ballmer told reporters at a business conference in Mumbai.

The deal values Facebook at US$15 Billion, and analysts have always maintained that Microsoft paid a steep price for a start-up that was deriving most of its revenue from an ad deal (with Microsoft) in which Microsoft was losing money on.

With the launch of OpenSocial last week the valuation seems senseless. Facebook is now trapped, trapped and trapped. They are trapped by Microsoft in their ad deal, their valuation has trapped them and it getting hard to recruit new employees and their closed system is no longer as attractive to developers who can develop applications for the open web via open standards.

Ballmer said "We want to succeed in the online advertising space". But at what cost?