Microsoft will buy Yammer, a startup that specialises in social networks for businesses, for $1.2 billion in cash. Yammer will become part of Microsoft's Office Division.
"The acquisition of Yammer underscores our commitment to deliver technology that businesses need and people love," said
Microsoft chief executive Steve Ballmer.
Launched in San Francisco in 2008, Yammer enables companies to make private networks that let employees communicate Twitter-style while keeping exchanges away from public viewing.
It has more than five million users, including workers at 85 per cent of the Fortune 500 companies, according to
Washington-based Microsoft.
"Yammer adds a best-in-class enterprise social networking service to Microsoft's growing portfolio of complementary cloud services," Ballmer said.
Microsoft said it planned to promote adoption of Yammer's service tied to complementary offerings of software or services such as SharePoint, Skype, and Office 365.
"When we started Yammer four years ago, we set out to do something big," said Yammer chief executive David Sacks, adding: "We had a vision for how social networking could change the way we work. Joining Microsoft will accelerate that vision and give us access to the technologies, expertise and resources we'll need to scale and innovate."
Yammer's key attraction is that unlike rival services sold by business software firms such as Oracle or Salesforce.com, Yammer spread virally by being free for people to use to collaborate with co-workers.
"We love the way Yammer built on a notion that things could grow virally," Ballmer said. "Consumerisation of IT (technology at work) is a trend that, more than any other company out there, Yammer has gotten right."
Yammer offers a free basic service and then gives companies the option of paying for premium versions offering administrative controls, security tools, analytics and other features.
With inputs from agencies
Special 
