Microsoft to buy Tumblr?

Word around the campifire is that Yahoo has been looking to buy Tumblr for $1.1 billion, but that that Tumblr thought that was not enough based on their $800 million valuation.

The deal is set to be finalized by Yahoo’s board tomorrow, however, Tumblr may be getting cold feet.  Executives at Tumblr now feel this offer may be too low.  Microsoft and Facebook have both expressed interest in buying tumblr.  Generally when large acquisitions are serious “lock-up” deals are put in place to prevent bidding wars from other companies.  However, Mayer will need to act quickly once her board approves the deal.

If the deal with Yahoo falls through would it make sense for Microsoft or Facebook to buy Tumblr?  For Facebook it may make sense.  Facebook needs to continually fight to stay relevant in the social networking space.  Facebook’s main revenue is comes from social advertising.  An extra $100 million in advertising revenue may help boost Facebook’s stock price.  The acquisition of Tumblr by Facebook would be a great defensive move, just as the acquisition of Instagram was.  However, Facebook could try to drive up the price of Tumblr which could put Yahoo in a more vulnerable position.

Source: Microsoft News

tI am not sure what Microzoft would gain from a Tumblr acquisition, outside of putting the pressure on Yahoo and perhaps Twitter and Facebook. Considering the limited succes Windows Live Spaces had, I wonder if Redmond really wants to have a social network. On the other hand, Spaces was pretty well thought out, and perhaps even aahead of its time. When lookimng at facebook today, a lot of their new features resemble functionality that Spaces offered. Perhaps I should look into my non-used Tumbl account.

Update: Turns out Yahoo bought Tumblr. And to think I just started using my Tumblr account.