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Microsoft Tries to Burn Down Facebook's Home

By Evan Niu, CFA - Apr 5, 2013 at 8:00PM

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Facebook isn't the first company to emphasize people over apps. Microsoft wants to make it clear that it thought of the idea years ago, even if that means undermining an important partner.

Investors were rejoicing yesterday over Facebook's (FB 3.86%) new Home suite of apps and integrated features, sending shares up 3% after the announcement on the prospects of increased user engagement and eventually incremental ad revenue once ads are deployed.

Home integrates directly into select Google (GOOGL 2.84%) Android devices and will undermine some of the search giant's own services, even if they're still technically available. Even though Home will step on some of Big G's toes, the search giant maintained niceties following the event, saying Home is another example of continued innovation on the Android platform.

Oddly enough, another company wasn't too impressed and is trying to downplay the significance of Home: Facebook search partner and investor Microsoft (MSFT 2.26%).

On Microsoft's official blog, corporate communications exec Frank Shaw noted that Facebook's announcement bore an uncanny resemblance to the software giant's own Windows Phone pitch from 2011. Facebook positioned Home as a way to put people in front of apps, as opposed to the other way around. 

That's an approach that Microsoft has been touting for years, since Windows Phone features a People Hub that is integrated directly with Facebook, LinkedIn, and Twitter. Shaw takes the opportunity to knock Android, saying the platform is already "complicated enough" (emphasis his) and that it has "sadly" always lacked a "People First" approach.

In that sense, Shaw understands why Facebook wants to launch Home, but also suggests that users looking for a "people-centric" phone just opt for the "real thing" and pick up a Windows Phone.

The move is curious considering that Facebook is ultimately much closer with Microsoft than it is with Google. Bing powers the search bar located on Facebook's site, and is also the driving force behind the social network's new Graph Search function.

Microsoft was also an early investor in Facebook, buying in for $240 million as early as 2007. Microsoft did unload 6.6 million Class B shares during Facebook's IPO last year, leaving it with 26.2 million shares and a 1.7% stake.

Why would Microsoft want to rain on its partner's parade?

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