Microsoft Corp. invested $15 million in Foursquare Labs Inc., forging a partnership that will help Windows-powered phones offer restaurant and entertainment suggestions to consumers on the move.
The investment, confirmed in an interview by Foursquare Chief Executive Officer Dennis Crowley, is part of a funding round from late last year that valued New York-based Foursquare at more than $600 million, people with knowledge of the terms said in December.
Microsoft is adding features to its Windows Phone software in an effort to compete with Apple Inc.’s iPhone and Google Inc.’s Android software, which together dominate the smartphone market. Location data from Foursquare will appear in a voice- activated assistant, code-named Cortana, that has yet to be released and will go up against Apple’s Siri technology, according to a person with knowledge of the plans.
“This is huge validation for the stuff we’ve been working so hard on,” Crowley said. “It’s one of the leaders in the space we work in looking at us and saying we can really help power the next generation of devices.”
Foursquare, which has struggled to generate sales in almost five years on the market, will get a new stream of data licensing revenue from the partnership, Crowley said. Foursquare’s valuation has been stagnant since 2011.
Bloomberg News reported in August that Microsoft and American Express Co. were both vying for a stake in Foursquare. Microsoft has been courting startups to add features to its phones and tablets, which lag behind Apple and Android products in the number of applications available to users.
Cortana, named for the artificially intelligent character in Microsoft’s popular “Halo” video game series, is scheduled to be part of the Windows Phone 8.1 release, to be shown within several months, according to a person familiar with the project and Foursquare agreement, who asked not to be identified because details haven’t been made public.
As part of the deal, Redmond, Washington-based Microsoft will gain access to more of Foursquare’s data than the company makes available publicly and to other partners. That data would allow Microsoft, with a user’s permission, to push out tips, suggestions and discounts tied to a person’s location, said Zig Serafin, a vice president in Microsoft’s Bing search unit.
“We’re building some contextually aware experiences to power some upcoming products in Windows Phone,” Serafin said. “This will be for anywhere you get a Bing-powered experience.”
Crowley and Serafin, along with other employees from the two companies, began working on a deal last year to collaborate on products, which eventually led to an investment, said the person familiar with the agreement. The companies did not discuss an acquisition, the person said.
Brendan Lewis, a spokesman for Foursquare, declined to comment on negotiations with Microsoft or plans for Cortana. Adam Sohn, a Microsoft spokesman, couldn’t immediately be reached for comment and the company hasn’t publicly commented on Cortana.
In December, Foursquare raised $35 million led by venture fund DFJ Growth. The company spent the year adding products for businesses to advertise to its users as well as ways to send instant and relevant recommendations to people.
Foursquare has 45 million users, compared with more than 230 million for Twitter Inc. and 1.2 billion for Facebook Inc.
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