MICROSOFT will purchase 1.6% of FACEBOOK for $240 million, which places a $15 billion valuation on the three-year-old company. Microsoft will begin to sell banner ads for international versions of the site and split the revenue with Facebook. In related news, RIM launched Facebook software for Blackberries.

BARRY DILLER told a group of conference attendees that major media companies still don’t “get” the Internet. He advised media companies to create new Internet properties from scratch, citing Time Warner’s popular TMZ.com as an example to follow. Diller believes media companies suffer from a fear of investing in companies and developing new things, a necessity that is understood and encouraged in the tech world. He labeled the TV business “temporarily prehistoric.”

DEUTSCHE TELEKOM is preparing to create a two-tier Internet for its European DSL service. A senior VP told a conference that it will charge a fee to companies that deliver online video to its customers, claiming that the network cannot handle Internet video. DT will seek payments from major media companies including giants such as Google and Bertelsmann.

WPP GROUP has acquired BLAST RADIUS, a digital agency that specializes in social-networking. The company’s clients include Nike, Starbucks and Whirlpool and it generates about $40 million in annual revenue. Blast employees will remain in their current offices but become closely aligned with WPP’s Wunderman agency.

VONAGE can’t catch a break. A security firm found that hackers can intercept and redirect the company’s Internet phone calls. The beleaguered VOIP-provider was informed of the problem over a month ago. However, the company has not yet responded to the problem and will not comment on it. Last week AT&T filed a patent lawsuit against the company, making it the third major phone company to do so.

About Shelly Palmer

Named one of LinkedIn’s Top Voices in Technology, Shelly Palmer is CEO of The Palmer Group, a strategy, design and engineering firm focused at the nexus of technology, media and marketing. He is Fox 5 New York's on-air tech and digital media expert, writes a weekly column for AdAge, and is a regular commentator on CNBC and CNN. Follow @shellypalmer or visit shellypalmer.com or subscribe to our daily email http://ow.ly/WsHcb

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"MediaBytes 10.25.2007" by @ShellyPalmer

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