Microsoft sells display advertising business to AOL

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Microsoft has inked a deal with AOL that will see the tech giant handing over its display advertising business to the latter.

As part of the 10-year deal, AOL will take over sales of display, mobile and video ads on Microsoft’s key services, including MSN, Outlook Mail, Xbox and Skype, in nine markets, including the U.S. and parts of Europe. In exchange, Microsoft’s Bing search engine will replace Google as the default search engine for AOL properties for the next 10 years with effect from 2016.

“Today’s news is evidence of Microsoft’s increased focus on our strengths: in this case, search and search advertising and building great content and consumer services,” said Rik van der Kooi, Microsoft’s corporate vice president of advertising and consumer monetization.

“This evolution in our approach to display advertising allows us to keep this focus, while working with industry leaders to market our services.”

Announcing the deal, AOL President Bob Lord said “We have enjoyed a terrific relationship with Microsoft, and this expanded partnership is a win for both companies and our advertiser partners as our industry continues to rapidly transform and evolve.”

“This collaboration further validates our leadership position in digital advertising and the shift to automation, while also allowing Microsoft to focus on what they do best: industry-leading services and search innovation,” Lord added.

It is reported that AOL will extend job offers to about 1,200 Microsoft workers in sales, marketing, engineering and other areas. This means that the deal will not result in any job cuts.

In addition, the Redmond has also expanded its partnership deal with advertising company AppNexus that will see AppNexus become its exclusive programmatic sales and tech partner across 10 markets including Austria, the Netherlands, Sweden, and more.

The shift is believed to be part of CEO Satya Nadella’s plan to shift focus on core businesses such as cloud computing and productivity.

Financial terms of the deal remained undisclosed.