Exclusive: Microsoft Mulls Legally Poking Facebook Over Ad Talent Raid
Microsoft–furious over a recent talent grab of its top advertising exec by Facebook–has been considering a wide range of options, including legal action to block the move, according to sources close to the situation.
Lawyer at both companies have been in back-and-forth talks in recent days after the hiring of Microsoft’s global ad sales head Carolyn Everson by the Silicon Valley social networking powerhouse to be its VP of global sales.
Among the more likely solutions being discussed: Barring Everson–a longtime ad sales exec who came to Microsoft from MTV Networks–from using any strategic information she learned at the company and also from contacting certain ad clients on behalf of Facebook for a certain period of time.
While a legal action to stop her from actually taking the position is the most serious option, it is certainly not without precedent for Microsoft. The company recently got a temporary restraining order to block one of its top government relations execs, Matt Miszewski, from working at Salesforce.com, pointing to non-compete and confidentiality contracts.
Whatever happens, it is clear the Everson hiring has infuriated Microsoft execs, especially CEO Steve Ballmer, since the company regards Facebook as a close partner. Microsoft is also a longtime investor in Facebook.
While considering a temporary restraining order against Everson in this kind of situation–since it is essentially the same job–is standard operating procedure for any company, several sources said tensions are higher than usual.
“This is just tone deaf on Facebook’s part not to think this would not be a problem,” said one person.
One particularly irksome aspect–top Facebook execs did not call Ballmer before news of the appointment leaked out to assuage the situation.
Facebook COO Sheryl Sandberg did release a statement when BoomTown broke news of the move in mid-February, in an attempt to make nice.
“Microsoft was one of our earliest partners and is still one of our most valued,” she said, in part. “We look forward to continuing to expand our relationship with them.”
Her dulcet words have apparently not worked.
In fact, the talent raid came as a surprise to many at Microsoft, especially since Everson (pictured here) had been hired in June after a long search and had become a high-profile presence at internal and external Microsoft events.
That included organizing the splashy “Imagine 2011, Microsoft Advertising’s Marketing Leadership Summit.” The event is set to take place at the end of March at the software giant’s Redmond, Wa. HQ and will include an evening concert by the band Train.
Now she will be doing such things for Facebook, where Everson will be replacing longtime and well-regarded ad exec Mike Murphy, who left the Palo Alto, Calif., company last fall. She will report to former Googler David Fischer, VP of Advertising and Global Operations.
Having a top exec who is amenable to and well known by Madison Avenue is key for Facebook as it ramps up its business, in anticipation of an IPO next year.
Despite being private, Facebook has recently been valued at between $50 and $60 billion by investors, who have been eagerly buying up shares of the company on secondary markets.
Under Murphy and Fischer, ad sales have been doing well already. Facebook’s share of online display advertising has more than quadrupled, from about three percent to almost 14 percent of the nearly $9 billion U.S. market, according to a recent survey.
In growing so quickly, Facebook has grabbed ad revenue–reportedly $2 billion last year–from old online powerhouses, especially Yahoo, Microsoft and AOL, and is also in a big fight with Google over premium ad sales.
Facebook’s surging usage and engagement are the reasons for the increased interest from advertisers, as well as its global growth in both market share and mindshare of consumers.
The opportunity at Facebook is clearly a big–and probably irresistible–move for the dynamic Everson, who has mostly worked in the mainstream media for much of her career.
Still, while movement of execs among top tech companies is not uncommon, there has been a lot less from Microsoft to Facebook.
Instead, Facebook has been most aggressive in its efforts to attract talent from Google.
No longer. In fact, the week before Facebook grabbed Everson, it also hired an up-and-coming exec, Chris Daniels, GM of Bing Mobile Product Management, to be its director of business development.
Still, there is some hiring war history between the companies. In late 2008, Microsoft’s Ballmer managed to lure former Yahoo exec Qi Lu to run its Online Services Division, several sources at both companies said, after he had told Facebook he would work there as its engineering lead. Lu had also been heavily recruited by Google.
Eventually, that was water under the bridge, which is what Facebook is hoping will happen with Microsoft over Everson.
Also important in the weighing of options at Microsoft is the obvious importance of keeping up good relations with Facebook. It is an important partnership, especially for its Bing search business, as an advantage over Google.
“Everyone is hoping to resolve this amicably,” said one person close to the situation. “There has been some damage to the relationship for sure, but the question is whether Microsoft wants to do something that would escalate that damage.”
Not surprisingly, both Facebook and Microsoft declined to comment on the fracas.