Microsoft has announced the purchase of office networking service Yammer for $1.2bn in cash.

Yammer will join the Microsoft office Division headed by Kurt DelBene, who stated that the acquisition of Yammer was a big step forward for the two companies.

"We're really excited about today's announcement. Yammer is the perfect partner to unleash the potential of enterprise social networking."

The Office team will continue to report to Yammer CEO David Sacks, who was equally enthusiastic about Microsoft's purchase of the site.

"Well today's announcement is great for Yammer because this transaction is going to bring Microsoft's reach, distribution, resources, expertise to help scale Yammer to the next level.

The move comes as Microsoft faces increased competition from Google, whose App suite offers online alternatives to the likes of Word, Excel and Powerpoint. Microsoft are now gambling that their expensive acquisition of Yammer will allow them to compete with Google in the cloud.

Yammer, dubbed 'Facebook for the workplace' allows companies to create a private social network for employees. Launched in 2008, after only four years the company claims 5 million verified corporations use the service, including Deloitte, Barclaycard and the BBC

Written and narrated by Alfred Joyner