According to a comment made at Microsoft’s Analyst Day today, Microsoft and Facebook are preparing a search and advertising deal that would lead to the integration of Microsoft’s Live Search and search advertising into Facebook. Microsoft already provides ads on Facebook as part of a ‘strategic alliance’ and Microsoft holds a $240 million equity stake in the company. No information about the financial specifics of the deal were mentioned so far and it is not clear if this deal would be exclusive.
Judging from the information available to us from the transcript of the call, Microsoft’s main reason for doing this deal is to get more people to know about Live Search. As part of that effort, Microsoft will also ink a distribution deal for its toolbar with HP.
Also, according to Steve Ballmer, Microsoft will be providing an API to Facebook which will allow them to create a “rich search experience for the Facebook users and that is something that they will launch in the fall working with us. And it will carry both our web results, as well as our page search advertising.”
This deal would mirror the one Google did with MySpace last year. In that deal, Google guaranteed MySpace $900 million in shared ad revenue for the next three years. However, it’s worth noting that the Google/MySpace deal has not been a huge success for Google. Users do not typically initiate a lot of searches from within social networks and monetizing advertising in social networks has turned out to be even hard.
We are trying to confirm more details of this story and will update this post as we get more information.
