Microsoft is paying $US1.2 billion ($A1.2 billion) to buy Yammer, an internet startup that has built a social network similar to Facebook for the business world.
The deal, announced on Monday, comes nearly two weeks after word of Microsoft's negotiations with Yammer first leaked out in published reports.
Yammer provides ways for companies to create private social networks for their employees. It has more than five million corporate users.
The acquisition represents Microsoft's latest attempt to adapt to a major shift in the technology industry, one that is fuelling 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 $US8.5 billion in the biggest acquisition in the company's 37-year history.
Yammer, based in San Francisco, had raised about $US142 million since its inception four years ago.
Yammer plans to continue offering a standalone service, while Microsoft will encourage its use alongside its other business products, including Office and SharePoint.
"When we started Yammer four years ago, we set out to do something big," Yammer CEO David Sacks said.
"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."