Microsoft moving out of display ad business, reportedly cutting 1,200 jobs [Updated]

Microsoft is stepping out of the web display advertising business. According to a new report out of Bloomberg, Microsoft will shift the ad operations over to AOL and AppNexus, reportedly cutting 1,200 jobs in the process.

From Bloomberg:

About 1,200 jobs at Microsoft will be impacted, with some positions to be moved to AOL and AppNexus, said the person, who asked not to be identified because the deal hasn't yet been announced. Some people will be offered other positions at Microsoft, while other jobs will be cut, the person said.

Similarly, news broke earlier today that Microsoft would move away from collecting mapping imagery itself, selling some of its Bing assets and transferring 100 of its employees to Uber in the process. All of this follows a company email sent out by Satya Nadella last week, in which the Microsoft CEO said that the company would have to make some "tough choices" going forward as it shifts focus away from areas "where things are not working."

Update: Microsoft has now commented on the partnership with AOL and AppNexus (opens in new tab) in a new blog post, saying the following:

Bing will now power search and search advertising across the AOL portfolio of sites. This 10-year agreement will enable AOL users to have access to world-class search powered by Bing across the company's global portfolio of sites. Now with 20 percent organic market share in the U.S., Bing continues to grow organically as well as through key partnerships like the one with AOL. This deal with AOL is the latest to validate the quality of Bing results and the performance of the Bing Ads marketplace. Bing is also an integral part of popular first- and third-party devices and services.In addition to the search partnership, AOL will become our seller of all display formats, including mobile and video, for the Microsoft portfolio across nine markets (Brazil, Canada, France, Germany, Italy, Japan, Spain, United Kingdom and the United States).With our expanded AppNexus partnership, they will become our exclusive programmatic technology and sales partner in 10 markets (Austria, Belgium, Denmark, Finland, Ireland, the Netherlands, Norway, Portugal, Sweden and Switzerland). Business in these markets will transfer over the coming months, subject to compliance with local law.

Source: Bloomberg

Dan Thorp-Lancaster is the former Editor-in-Chief of Windows Central. He began working with Windows Central, Android Central, and iMore as a news writer in 2014 and is obsessed with tech of all sorts. You can follow Dan on Twitter @DthorpL and Instagram @heyitsdtl

81 Comments
  • Can someone explain what exactly does "web display advertising business" deal with? .Is it like those Bing ads on web pages ?
  • I'm a former employee of the display advertising business, I left roughly 6 years ago though.  The display business is actually a lot of things, but maybe the simplist way to look at it would be to think of MSN (back then this also included msnbc - might still, not sure), messenger (skype), and many other microsoft websites.  Additionally, this included Xbox.  All of the advertisements you see on those I just mentioned are run by the microsoft display advertising business
  • God you guys tried so hard to clickbait the lowest of the low on Xbox its cringeworthy.
    Everywhere else though I was hoping would catch on. Much less intrusive ads and a lot more legit (read: Not malicious)
  • thanks for your reply
  • WP on the chopping block next.....
  • Maybe, but at least WP has something to do with "devices and services." Ads do not. WP still has a chance of survival because of that.
  • But it does. You advertise on devices AND services.
  • But the ads are neither a device or a service.
  • ads are the only way to monetize apps and services that are given away for free. All those IOS apps are given away for free. Where does the income come from? they may get some subscribers to office 365, but most people will probably use the apps for free.
  • I wouldn't say next, but I possibly in the near future. I feel like the invested too much recently to say it's on the block. 
  • It's not just that. If they planned to axe WP or Lumia, it would have been much more sensible to do so at the beginning of Windows 10 development or even before. Instead, they plunged into it and took the risk - you can be sure that they made lots of calculations of how much money they could potentially lose before deciding it was indeed worth taking the risk.
  • Don't make since they spent to much money to ditch it now plus why would the get up on stage and promote Windows 10 on phones and small tablets and then not a year later drop it. Plus you got to remember that Microsoft is growing there phone and tablet business in one key area enterprise they hold 25% of the enterprise market share in Europe they have sold the NYPD on there ecosystem and there growing market share all over the world. Yes I know that the USA ain't one of them but that has to do with the Americans being gullible and always settling for less why everyone thinks androids the bees knees when in reality its trash see settling for less. But back to my rant. Microsoft is also opening store all over the world I don't think they will plus you got WP outselling the iPhone in Russia and is gaining traction in Brazil the timing is all off it ain't like the BlackBerry and hell even they ain't giving up. For the first time the WP OS is #2 in market share in several markets and with the release of windows 10 its just going to get better plus as a oem Microsoft outsold both Motorola and Sony in the cell phone industry. I don't think it will happen but if it does iPhone here I come cuz ill never buy a android no matter what. I don't settle.
  • why would the get up on stage and promote Windows 10 on phones and small tablets and then not a year later drop it
    For the same reason that you'd launch a flagship Windows Phone with the tagline "the smartphone beta test is over," and then announce four months after launch that the device will be orphaned with no further significant OS updates other than a new tile screen... Or launch a significant tablet operating system, Windows RT, with multiple devices from Nokia and Surface that require 2-year carrier contracts... and discontinue support and manufacturing well before the 2-year contract period is up... Or launch and kill another smartphone platform, Kin, within six weeks... Or declare the future is Silverlight and XAML, only to kill both and replace it with a new development environment... I could go on but, I think you see my main point: Microsoft is no stranger to abrupt and disruptive changes to strategy that leave customers high and dry. Sadly, screwing over people who invested in Lumia and Surface is entirely within the realm of possibility.
  • You don't understand Microsoft strategy then the phone your talking about is the windows 7 phones it was running off of CE kernel. Microsoft switched to the NT kernel and since they been developing the one Os stratagey witch now finally is happening in windows 10. But the goal all along was just that. And so Microsoft brought all there devices to the NT kernel there by making it impossible for windows 7 to be upgraded. And now after years and years of development you think Microsoft is just going to give up on the one Os strategy and drop WP I can't think of a real reason why they would not now that they have sold more phone then Motorola or Sony and the fact is that they are 25% of the enterprise market in Europe witch is a pretty big market and growing. In Russia it the number two OS. And with windows 10 for mobile coming it will only get better. Plus Microsoft is set to introduce two new flagship phones as well as one Microsoft saying that something big is coming to windows phone. So I think if Microsoft was on the verge of chopping windows 10 for mobile they wouldn't be pushing it so hard and making announcement after announcement about windows 10 for mobile.
  • I agree wp is already more innovative than iphone or android and continuum will only solidify that. Its all about perception they need to highlight the differences and benefits and make it cool, desirable and affordable. Case in point the 520 a great smartphone and got a lot of people into wp.
  • You don't understand Microsoft strategy then the phone your talking about is the windows 7 phones it was running off of CE kernel
    Paying customers don't care about "Microsoft strategy" and the CE kernel. What they care about is that they purchased (or knew someone who purchased) the Microsoft product -- be it WP7 or RT or whatever -- and got abandoned, while competing products from Apple and Google got updated and had an easier upgrade path. They care about the fact that the discontinued products weren't positioned as "not good enough" at the time of sale. They're amused that Microsoft thinks it can execute a "come from behind" victory without an ironclad guarantee that it's actually launching products with a future and not treating customers as guinea pigs. And they're entirely unsure if Microsoft will just discontinue W10 and replace it with something else six to 18 months after their purchase -- abandoning them yet again. So they ask "why take the chance, when OS X and iOS and Android are all safe and well-supported?" Microsoft needs to develop an answer to that question, and musing about "hard choices" to discontinue key product lines is NOT it. 
  • So they ask "why take the chance, when OS X and iOS and Android are all safe and well-supported?" I'm gonna have to disagree with you there. There are many iOS and Android devices that are not on the latest version of their respective OS's because the hardware is no longer supported, some of them left in a broken state at the time that no more updates were decided to be put out. Also not sure why you added OS X to the list there, Windows for PC's has been very well supported and hasn't ever started over and left people out in the dark. You can still get support for defunct Windows OS's, you have to pay, but it can still be gotten.
  • Wow, you are still talking about this. This must really hurt your feeling a lot.
  • Getting ripped off for $1,000+ in hardware that was orphaned -- and the environmental impact of those millions of useless devices that are now in landfills -- definitely smarts.  Especially when, had I gone with Apple or Google's contemporary competitors, I'd still be getting regular app updates and would still be able to run Microsoft services... unlike the poor folks stuck with a Lumia 900.
  • What useless devices are you talking about? It's not like a Surface RT stops working the day an update comes out (RT's are getting updates by the way) nor do any of the WP devices, they can still make phone calls. Welcome to the world of hardware. Things become obsolete, they don't cease to function (unless it actually breaks) You're inventing things to hate on about Microsoft when every single hardware manufacturer does the same thing. 
  • +1520
  • It is indeed beginning to look like it...
  • Except people reading way too much into things, nope, not really. Even if a write-down seems likely (or even further lay-offs related to the Nokia acquisiton, unfortunately), that does not at all equal "axing" Windows Phone or Lumia phones. Keep in mind Surface saw a $900 million write-down in 2013. I'm fairly sure Microsoft will keep committed to Windows 10 Mobile and Lumia phones for at least the entire fiscal year 2016 if not beyond. Sure, they may start making less models (which may not be a bad idea) but they won't stop entirely.
  • No idea what you people are smoking.
  • Not sure ​who you're talking about.
  • I was wondering the same thing...
  • Not gonna happen; does not matter if it loses money; xbox has been losing money for over a decade, but some sectors such as mobile are way too important into the future to be cut even if they are not really profitable.
  • Duh stay relevant.
  • A bunch of diva's in here.
  • Hookers, more like...
  • FYI. Windows phone is already long gone. Game over. The next one is call Windows 10 for phones. Or Windows 10 mobile. Yes, it is another reboot by Microsoft - the flicker minded company. It's just simple math - Windows Phone has not be been doing well after all these years. It is only a matter of time MS pulling the plug. Technically, the plug is already pulled. :)
  • Not sure, if anybody has noticed it already. The windows phones are pushed way back in Microsoft Stores. They used be in the very front aisle until very recently. One more way to sense what's coming for the phone business.  In other words, Satya is out there to prove Steve Balmer wrong in as many ways as he can. A short term victory for sure, but not sure how much win this is going to be for long term. 
  • Not sure what Microsoft Store you shop at, but phones were quite prominent at the Mall of America store during my trip there last weekend. Xbox One and all the accessories (keyboards, cases, cables, etc., etc.) were in the back of the store.
  • True that​ ​ via wmpoweruser.com
        One can not ignore that change is afoot at Microsoft, with the company very prepared to, as they say, make “tough choices in areas where things are not working”, with the latest evidence being the sale of part of Bing Maps to Uber. Now of course one of the areas where Microsoft has really failed to gain traction has been Windows Phone, leading many to speculate that that arena is next for the chopping block. Long time Microsoft watcher and leaker MSFTnerd has added some more fuel to the fire with a series of tweets, saying Satya Nadella and the Senior Leadership Team were debating dropping Windows phones and small tablets to save Windows, pushing instead Microsoft services on official Google Play Android tablets. In return Microsoft would cooperate with Google in location services, video and ads, presumably pushing Google services even more on Windows users. To me it smells quite a lot like capitulation, but then it has been a rather long war, and maybe Microsoft has given up on the OS platform war and instead plans to fight with productivity apps and services instead. Update: Bloomberg has just reported that Microsoft is dropping its display ad business, and will now allow AOL and AppNexus to sell all of their ads on their properties. This will result in the loss of 1,200 jobs, and crucially take Microsoft out of competition with Google ​ ​ ​ ​ ​ ​ ​ ​ ​
  • That's exactly what the smartphone world needs, less choices. Conform to Google, lord and master of the World./s I will never give in to their anti-competitive duopoly. Never!!!!!! Without competition in the smartphone market, Google and Apple will tell you what you want instead of making products people truly want!!!!!!!! They already killed Palm, and BlackBerry is dying. You can't possibly think Google is the GOD of smartphones. They will run our lives and society will be their bitches. Microsoft is the only company standing in their way.
  • Google isn't the god of smart phone. Other wise they won't have chosen android. They are a good marketing company.
  • As i was saying tge last time. They are cutti,g jobs again.
  • That Blog Post came out pretty fast, just few minutes after the original article got published.
  • This ia good so Microsoft can concentrate on Windows 10 and other things they offer such as Microsoft Office, Xbox and Hololens and yeah the Azure.
  • "World class"?! So very far from it...
  • A lot closer to it than Google.
  • ???
  • HAHA this is a joke for sure, Bing is not even in the half of the markets of the world.
  • Can someone explain the point of expanding Bing without controlling the add revenue?
  • Data!
  • How is data paying the bills Eddie?
  • Probably because they can then turn around and sell that data.
  • Rubbish, the vast majority of Google's revenue is from advertising. Having a strong search engine and mobile presence is how they make money. Now if bing had 100% of the market others would be making the money, they have sold their soul and future in search.
  • I'd guess that Bing could be up on the chopping block shortly, or downsized to just be a driver of Cortana.  It has to be a loss-leader without targeted advertising to support it.
  • Because they will still get paid for searches. They will no longer get paid for, or create, display ads. These are two separate things.
  • Looks like MS is taking some of its fingers out of its many pies which is okay by me. Seems I heard digital ad revenue has been declining of late so it might be that now is the time. Disagree that WP is next though, they haven't even done their big Windows 10 advertising push yet and we haven't been through the holiday season yet so it's way too early to start doomsaying.
  • How is Bing going to survive?  Surely the ad business is the only potential that Bing has.  No ads, no income, no improvement, unless Microsoft plans to prop it up from their other business, which history tells us is unlikely.
  • What? AOL will be using Bing. AOL will be advertising MS products now (Display Advertising).
  • Think : Banner ads versus Search advertising 2 different tings
  • From what I read it sounds like they signed a agreement for bing to power aol and other sites searches so I bet with ads Microsoft is getting there cut of the pie. It's a 10 year agreement and can always be canceled when the time is up so it would in theory gain market presence but powering all these sites and get people to like the Bing searches and then in ten year let the agreement drop and gain alot of users cuz they got accustomed to Bing search.
  • "Display advertising is a type of advertising that is located on websites. It can be seen in a wide range of different formats and contains items such as texts, images, flash, video and audio. The main purpose is to deliver general advertisements and brand messages to the plus 40 million people connected to the Internet each month."   FYI.
  • They will most likely still get a cut of the ad revenue generated by their products (Bing, Xbox, mobile etc.). You are still going to see ads in the same places you did before and MS is still going to make money off those ads. The difference is now they are only getting the portion for display instead of the majority of the money (but they also have a much lower overhead and don't have to work on actually getting the advertisers) It's the same as if you had a website. Instead of calling up companies and asking for $100/month to put an ad on your site you use Google Adsense or Bing's equivelant and collect like $25 based on clicks. Sure you don't make as much but you don't have to worry about getting those companies to advertise directly with you, spend all that time appeasing them, and worrying if they decide to try another site.
  • Good post!
  • I wish Windows Central would have expressed an idea like this in the article. This presentation might skew peoples' perspective of these companies' changes. They're just restructuring the way their business is pulling in money and their day-to-day operations. This makes it sound like they're just losing jobs and closing off that revenue stream, rather than making an operational shift. One looks like "Doomsday" to uninformed readers, the other looks like businesses handling their business.
  • of course they won't cut off windows mobile! they are putting a lot of efford into it. if they quit, than there is only 2 major OSs out there. + windows 10 on PC is ment to push the mobile up.  i think the big picture aims for this: -there are not a lot of win 8/8.1 users. -they make win 10 free, so there is A LOT of users. -with that, there comes a lot of demand for apps! -people make universal apps (2 birds, one stone), therefore windows phone gets apps, without getting bigger share to start with! :)   so they would have to be mad in order to cut WP now.
  • Anyone want to translate the official Microsoft response into plain English? Particularly that last bit.
  • Makes sense...growing through partnerships...
  • Who is still using AOL in 2015? It's been about 15 years since I've seen anything of theirs. It would be like selling Bing to Geocities!
  • Maybe now we'll start getting those AOL discs in the mail with Bing preinstalled.
  • Lots of people visit their sites like Huffington Post and Engadget.
  • I'm taking this deal with AOL as a small nudge in favor of Verizon launching the 940 XL since they own them now (Don't ruin my happy thoughts just go with it). 
  • Verizon will axe the device in Lee than 6 months.
  • 1200 jobs impacted some transferred some being cut. This doesn't mean 1200 job cuts....
  • So...pubcenter?
  • I don't know how they pictured ad business factoring into their bottom line, but assuming it was just a distraction with potential upside like Google, then I am happy they really are returning to their core business. Assuming that is what is going on, it's a little confusing.
  • I can only dream how awesome WP would be if MS had created 1200 for its development, marketing and customer relations. (note: This might be the case, but honestly sometimes I feel as if MS just has a few souls championing WP).
  • The souls are right here in windows central-
  • you mean the good ads? the IE, Skype and office ads in the side of my outlook website? so what we're going to see now? how to grow a 3rd leg in 2 days?
  • @EspHack The IE is going to end with the new Windows 10 OS
  • I've reading MS is sacking Xbox, Bing, phones, keyboards, mice and... virtually everything in WPC forums, since forever. Lol.
  • A
  • Wow, a "Massive" move. ... I'll see myself out.
  • Microsoft absolutey has to stay relevant in the mobile device world.... Just providing third party apps to ios and Android isn't enough... Microsoft is trimming the fast wherever they can to keep solvent
  • Guess I'll keep my 1520 and not upgrade for fear wp will one day be forced by Nadelli to walk the plank.
  • I think if MS will put Windows Phone/Mobile to the slaughter house they should at least announce it as early as today because it may be only 3% market share but it is growing else where and many people are starting to believe that sometime, somehow Windows Mobile will find success.  I think if MS believes in Windows Mobile then put a heart and a lot of effort into it because I prefer to see them lose than to quit.
  • They have 100 million Windows Phone customers.  If they abandon WP yet again AND walk away from their mobile strategy, Windows 10 will be a total massive flop and Microsoft will become completely irrelevant in consumer computing.  It will become the DEC VAX of enterprise tech in the 1990s, desperately clinging to legacy users for a few more years.