Microsoft's purchase puts Facebook's value at 15 billion dollars. On top of getting 1.6% of Facebook, Microsoft also gets to sell ads for Facebook, and deepen their business relationship.

Is it a smart business move?

Would providing seed money to Facebook's expansion eventually cause Microsoft to shoot themselves in the foot? Remember when Yahoo funded Google's start? It backfired and now Yahoo is getting killed in Search.

On the other hand, this purchase could be a purely defensive move against Google.