Both Google and Microsoft are said to have been in negotiations with Facebook at one time or the other, but Microsoft has an advantage at the moment, due to an exclusive agreement with Facebook to deliver ads to Facebook users that was signed last year and runs until 2011.
Question: why wouldn't either Google or Microsoft want to buy all of Facebook instead of just a 5% stake?
Answer (according to the Wall Street Journal):
"Microsoft has considered trying to buy the company outright, but people familiar with the matter said it's unlikely at this time. Facebook founder Mark Zuckerberg has steadfastly kept his company independent with the goal of eventually taking the company public. In a round of negotiations last year, Mr. Zuckerberg rebuffed acquisition approaches from Microsoft, Yahoo and others."
See also my previous article "Facebook: it's not just for kids anymore..." on my XML Aficionado blog.
Also seen in Valleywag and TechCrunch today.
UPDATE: New posting in the WSJ Deal Blog has an interview with Bo Peabody, the 36-year-old founder of Tripod Inc. - one of the first social networks, all the way back in 1992.