Struggling with its Internet misadventures in the face of the relentless Google onslaught, a desperate Microsoft is investing $240 million in social networking web site Facebook Inc.

Google, which was also keen on a deal with Facebook, has a social networking web site Orkut that’s popular in India and Brazil but has yet to catch on in the U.S..

Microsoft’s investment - which gives it a tiny 1.6% stake in the social networking web site - is set to happen in Facebook ’s next round of funding and values the profitless start-up at an astronomical $15 billion.

The two companies have an existing relationship under which Microsoft is the exclusive provider of banner ads on Facebook in the U.S. 

Under the expanded alliance, Microsoft will be the exclusive third-party advertising platform partner for Facebook, and sell advertising for Facebook internationally in addition to the U.S.

Facebook will also sell ads on its own through a new ad network that it expects to debut shortly.

Writing on the Microsoft-Facebook deal, the Wall Street Journal said (subscription required):

The deal is rooted in an online-advertising boom that has turned Facebook into the newest Internet darling. In recent years, advertisers large and small that once focused their spending on television, newspapers and other traditional media have started shifting their spending to a host of Web sites. Google has built its fortunes on that shift and others including Microsoft are rushing in.

Founded in February 2004 by Harvard dropout Mark Zuckerberg, Facebook has received funding of $40.7 million from a bunch of marquee investors including Founders Fund, Accel Partners and Greylock Partners.

Facebook claims it’s got 50 million active users and that 200,000 new users are registering every day.

Microsoft has been one of the biggest failures and laggards on the Internet side of the computer industry.

The software giant’s biggest failure is on the search front where Google has walked away with the glory and all the money.

Despite pouring in hundreds of millions of dollars, Microsoft’s MSN search engine is on a downward death-spiral in the face of a far superior service from Google.

Microsoft head honcho Bill Gates and CEO Steve Ballmer have failed to make headway with their online initiatives. As the WSJ story says:

Winning Facebook’s hand could help lift morale at Microsoft’s struggling online business. Over the past four years the software giant has invested heavily into building its own Internet search and online advertising services but has failed to keep pace with the growing online ad market and its leader Google.

The folks at WSJ report that Facebook will break even this year on a cash flow basis on revenues of $150 million.

Auto giant General Motors is struggling to sell its cars in the U.S. but is making steady headway in India.

In the U.S., GM is shutting down more plants, cutting production, firing more employees, slashing wages for new workers and seeing lower car sales. In the third quarter, GM car sales fell 6.1% in North America. Recently, GM dumped its healthcare obligations to a Voluntary Employee Benefit Association run by the unions.

Overall, the outlook for GM in the U.S. is pessimistic, according to a recent story in the Wall Street Journal (subscription required):

The struggle to turn the tide in North America promises to remain daunting for GM and its top competitors over the next 15 months as car buyers continue wrestle with overarching economic concerns, notably a sustained downturn in the housing market.

 GM sales analysis manager Paul Ballew said on a conference call recently:

The U.S. is a head wind we continue to wrestle with on a global basis.

Bottomline, the sheen has worn off the GM brand in the U.S.

But India and China are silver linings in the dark clouds hovering above GM.

According to a recent AP story, GM more than doubled the number of cars it sold in India in the past six months.

GM is also expanding its dealer network in India and providing longer warranties. General Motors India VP P.Balendran said:

Finally, we are getting our products right, our prices right. And we have become more customer-friendly.

The AP story notes that for the first time GM’s market share in India topped that of its rival Ford.

In April, GM chairman Rick Wagoner was on hand for the launch of the company’s Spark mini-car in India.