Microsoft is paying $1.2 billion to buy Yammer, an Internet startup that has built a social network similar to Facebook for the business world.
The deal announced Monday comes nearly two weeks after word of Microsoft's negotiations withYammer leaked out in published reports.
The acquisition represents Microsoft's latest attempt to adapt to a major shift in the technology industry, one that is fueling demand for more Internet services and social networking tools. That shift is threatening to weaken Microsoft's position as the world's largest software maker.
Last year, Microsoft bought Internet video chat service Skype for $8.5 billion in the biggest acquisition in the company's 37-year history.
Yammer, which is based in San Francisco, had raised about $142 million since its inception four years ago.