Microsoft Purchases 'Yammer' Social Networking Site for $1.2 Billion

Microsoft acquired the social networking site known as Yammer for $1.2 billion this week.

Microsoft wants to use Yammer's collaborative technology across productivity products such as Office, SharePoint, Dynamics and Skype in order to enhance its social computing strategy.

The purchase comes just a little more than one year after Microsoft acquired video calling firm Skype for $8.5 billion. The company seems to be swallowing up properties in order to keep up with the competition.

Yammer can be described as a "Facebook for the workplace," and was founded by PayPal founder David Sacks in 2008. It has raised around $142 million since it debuted and is also backed by Facebook investor Peter Thiel.

"When we started Yammer four years ago, we set out to do something big. 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," said Sacks.

Yammer works as a messaging tool for colleagues and allows companies to have their own private social network for its employees.

Microsoft's taken a cue from small startups such as document sharing site Dropbox, and project management tool Basecamp, and will use Yammer to improve the experience of using software in the workplace.

The social networking site allows Microsoft to update its Office products to today's standards of human interaction and communication. Programs such as Microsoft Word, Excel, and Powerpoint generate around 50 percent of the company's revenues, so it seems like Microsoft is doing its best to keep them updated and not fall behind the competition.

Google recently launched its Google Apps suite that provides users with web-based alternatives to each of Microsoft's Office products.