Facebook, Microsoft End Advertising Deal

Facebook has cut short a deal in which Microsoft sold display advertising on the Web's largest social network.

Microsoft, however, said that it would continue to be the exclusive provider of Web search on Facebook, and would make more features from Microsoft's Bing search engine available to Facebook users. In addition, Microsoft's technology would power search on Facebook in countries outside the U.S., reaching all of the social network's 400 million users.

Microsoft's new unspecified search features wold appear on Facebook "over the weeks and months ahead, the company said.

The decision to hand display advertising sale back to Facebook was mutual, according to Microsoft.

"Given the kinds of advertisements that make sense within a product as unique as Facebook, it just made more sense for them to take the lead on this part of their advertising strategy," the company said last week on its Bing blog.

Microsoft has been selling U.S. display ads on Facebook since 2006. In October 2007, the software maker extended the deal to 2011 and announced that it would also sell banner ads on Facebook's international sites. As part of the deal, Microsoft made a $240 million equity investment in Facebook.

In July 2008, Microsoft reached a deal to add what was then called Windows Live Search into Facebook in order to provide search advertising. The social network at the time had 90 million users.