Setting the stage for a possible bidding battle, Microsoft Corp. is mulling an investment in Facebook Inc. that would value the rapidly growing online hangout at $10 billion or more, according to a report published Monday.

Citing unnamed people familiar with the matter, The Wall Street Journal said Microsoft is holding preliminary discussions that could culminate in a $300 million to $500 million in Facebook, a Palo Alto social-networking site founded just 3 1/2 years ago.