End of day yesterday, Microsoft announced a 240 million dollar investment in Facebook, the high flying social network everyone loves to talk about.

The investment gives Microsoft a 1,6% ownership and suggests Facebook’s market value at 15 billion. This is quite a lot of money for a simple – but admittedly smart – piece of software that was launched some three years ago by a university kid. More importantly, the deal assures Microsoft the rights to sell advertising on Facebook until 2011.

Even though the industry cheers Microsoft’s move as a win over Google and Yahoo!, I consider the investment as a high risk gamble. Here are some reasons:

- To merely be able to rep a website and to own a tiny 1,6% of a company, 240 million dollars just seems hell of a lot money.

- Birds of a feather flock together. Just like in real life, there will be a need for many different social networks attracking many different social affinity groups. New networks such as “aSmallWorld” which connects the rich and famous are successfully riding the wave. Google’s own network Orkut is doing extremely well in Brazil and parts of Asia. All this suggests that the value of social networks is not only defined by who is on it but also who is excluded. This phenomenon will install a “social reach barrier” for global advertising budgets.

-  Not only the number of new Facebook members is sky rocketing but also the one of fake IDs. Many of Montreal Canadians hockey star for instance are suffering under an “identity hijack” on Facebook. All of a sudden there are ten Saku Koivus and Chris Higgins, all of them pretending to be the real one. Value to advertisers: zero. Value to “real friends” on Facebook: zero.

- Last but not least, Facebook just isn’t a cool place to hang out for advertisers. The fundamental motivation of all Facebook members is to connect with “friends”, not with brands. If I want to connect with a brand, I’ll simply google it.

What do you think?