From the NYTimes:

Microsoft has won a high-profile technology industry battle with Google and Yahoo to invest in the social networking upstart Facebook. The two companies said on Wednesday that Microsoft would invest $240 million for a 1.6 percent stake in Facebook. The investment values the three-year-old Facebook, which will bring in about $150 million in revenue this year, at $15 billion.

It's not really worth 15 billion, obviously. This is a strategic move on Microsoft's part, designed to lock Facebook to its fast-growing but still relatively small advertising business. The deal is strikingly similar to Google's move to pay $1b for a 5% stake in AOL in late 2005, another bidding war which Microsoft lost. That deal valued AOL at $20b, which it was obviously not worth even to the most optimistic bidder. Basically, the money is a blocker, a bribe to say "don't do business with the other guys". In addition to its hold on AOL, Google paid $900m to MySpace for a deal which involved no ownership stake but instead was explicitly about locking in advertising and search.

The strange 1.6% share that Microsoft has purchased makes sense in this context -- they didn't care what percentage of the company they owned; the $240m was the budget they had for this blocking move, and Zuckerberg got to choose what percentage that represented. So he has essentially valued his own company at whim, and while Zuckerberg clearly believes Facebook is worth $15b, very few other people do -- not Yahoo!, who refused to buy it for more than $950m last year, and not Microsoft, who have $30b lying around and could have bought it outright if they wanted to.

So please, let's not get all excited about this.

Update: It would appear others agree.

Update: And another, from a rather weightier source.