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Shelling out $240 million for a 1.6 percent stake in Facebook may be Microsoft's way of keeping Google away from the social networking site, but the deal may not be worth the money unless Microsft can get Live Search into the service.

Microsoft Needs Live Search On Facebook

In the days when hoops legend Michael Jordan dominated the NBA as part of the Bulls, he essentially had the power to be paid whatever he asked to be paid. It took longer to get him to ask for a number than it did for ownership to write the check.

We see Facebook and Microsoft having a similar relationship, through their recent negotiations. Microsoft has plenty of cash. $240 million is a big number, but to a Microsoft, it's virtually just another number on a spreadsheet.

It could be a bargain, if they can do what Greg Sterling expects them to do: place Live Search for web searching on Facebook. For some reason, the respective representatives of Facebook and Microsoft played a little coy when asked about search.

Microsoft didn't value Facebook at $15 billion just to own a piece of a possible IPO. Microsoft wants search advertising to be a big part of its business model in the coming years. That youthful demographic of students on Facebook makes marketers drool with the desire to put ads in front of them.

As Sterling noted, anyone who wants to do a web search has to leave Facebook to start one. If people are going to leave, it makes sense for the web search to start at Facebook, with Live Search, and hope people exit through the contextual ads alongside the search results.