AOL to take over management, sales of ads from Microsoft

AOL yesterday said it was entering into a deal with Microsoft to take over management and sales of ads.

Under the agreement, AOL would take over management and sales of display, mobile and video advertising that appeared on Xbox, Skype and other Microsoft products in the US, Canada, Japan, Brazil and five European countries.

The move enables Microsoft to move out of the display ad business even as it gives AOL access to a number of the web's most popular destinations.

Microsoft search engine, Bing, in turn would power search results and search advertising on AOL websites. The arrangement could lift Bing, which had long been playing second fiddle to Google, which was being displaced as the search engine of choice on AOL sites.

''For us, it's another piece of validation for how far we've taken Bing in six years,'' said Rik van der Kooi, corporate vice president at Microsoft, The New York Times reported.

The deal comes as the latest of several by Microsoft to focus on its core products, an effort steered by Satya Nadella, its chief executive.  Nadella last week released a new mission statement for Microsoft: ''Empower every person and every organization on the planet to achieve more.''

Meanwhile, Bloomberg reported that Microsoft was shutting down its web display advertising business and handing operations over to AOL Inc and AppNexus Inc, citing a person with knowledge of the matter.

The development would affect 1,200 jobs at Microsoft with a number of positions being moved to AOL and AppNexus, according to the person, who requested anonymity as the deal had not yet been announced. The person added a number of people would be offered other positions at Microsoft, while other jobs would be axed.

The software maker was exiting the business as  chief executive officer Satya Nadella worked to sharpen focus on three key areas: personal computing, cloud platforms and business productivity.

Since taking over as CEO early last year, Nadella had been streamlining the workforce, acquiring mobile and cloud software makers, and paring units not central to his strategy.

Financial terms of the deal were not known.