Microsoft makes approach to Facebook

NEW YORK - Microsoft has made an informal approach to Facebook about a possible acquisition, casting doubt over whether a deal with Yahoo! will now be done.

According to a report in the Wall Street Journal, Microsoft informally approached Mark Zuckerberg, founder of the social-networking website, to gauge his interest in selling Facebook to the software giant.

Microsoft, which last year bought a 1.6% share in Facebook for $240m valuing the site at $15bn, made the approach via its investment bankers, but the paper reported there are no active discussions between the two.

However, Zuckerberg has in the past not showed signs that he favours a sell off. Instead he has pursued a strategy of taking minority shareholders such as Microsoft.

News of the approach could put in doubt speculation that Microsoft was set to return to Yahoo! and cut a deal with the internet firm after CEO Steve Ballmer ended talks at the weekend after a failure to agree a price.

In a letter to Microsoft staff after the failure of the Yahoo! Bid, Ballmer said the firm would explore acquisitions and increased investment in its own online services.

In another possible twist there have been reports that Microsoft and News Corporation have been talking, on an informal basis, giving credence to the idea that Microsoft is casting around for alternatives to a Yahoo! deal.

Talks with News Corp would involve Microsoft spinning parts of its online group and combining them with MySpace.

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