In a statement today, Microsoft explains that AOL will become its only seller of all display formats, including mobile and video, in nine big markets, namely Brazil, Canada, France, Germany, Italy, Japan, Spain, United Kingdom and the United States, whereas AppNexus will be its exclusive programmatic technology and sales partners in 10 markets, Austria, Belgium, Denmark, Finland, Ireland, the Netherlands, Norway, Portugal, Sweden and Switzerland.
While there’s no official statement in this regard, Bloomberg reports that, as part of this transition, 1,200 Microsoft employees would be laid off sometime this year.
In addition, as part of the deal, Microsoft’s Bing will power search results and search advertising on AOL’s properties for the next 10 years. Bing is displacing Google, which had long provided search technology for AOL.
As part of the new arrangement, more than 500 Microsoft MSFT, -1.97% employees will move to AOL to bolster its ad sales operations. Both companies insisted that no Microsoft employees will lose their jobs as result of the deal.
Essentially, with the exception of search, this deal marks Microsoft’s exit from the ad sales business. Ironically, the move comes just days after the tech giant courted hundreds of advertisers in Cannes at a big ad industry gathering. In fact, Microsoft had one of the tougher tickets for brands and ad buyers attending the festival: demos of the companies Microsoft’s HoloLens technology, a wearable device via which people can interact with holograms.
“We believe in the advertising model, and we care deeply about those services that are monetized through ads,” said Rik van der Kooi, corporate vice president of Microsoft’s ad business. “But if you look at trends in the industry, it makes complete sense for us to line up with AOL.”
An expanded version of this article appears on WSJ.com