Facebook has spurned London to set up its international headquarters in Dublin, citing the city’s pool of talented, multilingual graduates.

The announcement came as Microsoft, which owns a stake in Facebook, said that it was opening three European research centres, one of which will be in London, in an attempt to close the gap with Google in the field of internet search.

Facebook’s Dublin headquarters will house the social networking website’s technical, sales and operations staff. The move is expected to create about 70 jobs and will not affect the website’s existing London base, which is a commercial, rather than operational, office. Staff in Dublin will cover Europe, the Middle East and Africa, while the rest of the world is covered from Facebook’s global headquarters in Palo Alto, California.

Sheryl Sandberg, Facebook’s chief operating officer, said: “After exploring various locations throughout the region, we decided Ireland was the best place to establish our new headquarters.” She added: “The talent pool in Dublin is world class and recruiting local talent will help us to understand better the needs of local users and the regional dynamics that, in turn, can give us better insight into what features matter most.”

The Republic of Ireland’s corporation tax of 12.5 per cent, which compares favourably to Britain’s 28 per cent, has also helped it to attract companies.

Mary Coughlan, Ireland’s Enterprise Minister, said: “Facebook has fast become a worldwide name and it is a terrific endorsement that Ireland can satisfy the needs of such highly innovative and technologically advanced companies as they make critical investments.”

Barry O’Leary, chief executive of IDA, Ireland’s inward investment agency, said that Facebook’s move underlined the country’s continuing appeal to leading multinationals.

Facebook, which says that it has 110 million active users, is the world’s most popular social networking website. Last year, Microsoft paid $240 million (£136 million) for a 1.6 per cent stake in the website, valuing the company at $15 billion.

Microsoft announced plans yesterday to open three “research hubs” in London, Munich and Paris, to help it take on Google. Steve Ballmer, Microsoft’s chief executive, said: “We are the challenger, not the leader, in search, but we believe strongly that search is in its infancy and there is so much room for innovation”. Microsoft is reponsible for only 2 per cent of internet searches, compared with Google’s 79 per cent, according to ComScore, the internet analysts.

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