Microsoft shakes up online division, deepens Facebook ties
Analysts believe putting its Live online search service to work for the 90 million people who use Facebook should help Microsoft. Top 20 IT Exporters | Top 15 BPOs
By Agencies |
| Bill Gates & Steve Ballmer face Microsoft employees during a farewell event in Redmond. More |
SAN FRANCISCO: Microsoft is shaking up management of its online division and strengthening its tie to Facebook in the aftermath of a failed bid to buy Yahoo to bolster its lagging Internet business.
The US software colossus told analysts on Thursday that later this year Facebook will begin using its technology for online searches and paid links, which are essentially Internet ads.
Google has a similar deal with Facebook rival MySpace. Facebook currently uses its own online search tools, which have disappointed members interested in being able to scour the Internet without leaving the popular social-networking website.
"Search in Facebook definitely needs to get better," Facebook founder Mark Zuckerberg told reporters on Wednesday.
Analysts believe putting its Live online search service to work for the 90 million people who use Facebook should help Microsoft's status in an arena dominated by Internet powerhouse Google but won't be a game-changer on its own.
The US software colossus told analysts on Thursday that later this year Facebook will begin using its technology for online searches and paid links, which are essentially Internet ads.
Google has a similar deal with Facebook rival MySpace. Facebook currently uses its own online search tools, which have disappointed members interested in being able to scour the Internet without leaving the popular social-networking website.
"Search in Facebook definitely needs to get better," Facebook founder Mark Zuckerberg told reporters on Wednesday.
Analysts believe putting its Live online search service to work for the 90 million people who use Facebook should help Microsoft's status in an arena dominated by Internet powerhouse Google but won't be a game-changer on its own.
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"It should increase their number of search queries but they need to do other things as well," Directions On Microsoft analyst Matt Rosoff told reporters.
"They need multiple deals to increase awareness and usage of Live Search." Microsoft inked a deal to serve up ads on Facebook late last year when it paid 240 million dollars for a 1.6 percent stake in the northern California startup.
Word of the deepened Facebook alliance comes a day after Microsoft announced a shake-up of its Platform & Services Division that includes the departure of the executive considered the architect of the failed campaign to acquire Yahoo.
The division is being split into Windows Live and Online Services groups that will report directly to Microsoft chief executive Steve Ballmer.
Platform president Kevin Johnson is leaving Microsoft. "This new structure will give us more agility and focus in two very competitive arenas," Ballmer said in a statement. "It has been a pleasure to work with Kevin, and we wish him well in the future."
Rosoff suspects Johnson was looking to move on with his career even before the quest by Microsoft to buy Yahoo fell apart.
Microsoft offered to buy Yahoo for 44.6 billion dollars in stock and cash on January 31 but withdrew its offer on May 3, saying Yahoo refused to budge despite a bid sweetened to nearly 50 billion dollars.
"It's really clear from Ballmer's remarks that Johnson's departure took the company by surprise, which suggests he left on his own accord and wasn't asked to leave," said Rosoff, who was among analysts being briefed on Thursday at Microsoft's campus in Redmond, Washington.
Microsoft's online Live services have languished in distant third place behind market leading Google and second-place Yahoo.
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Microsoft's new Windows Vista operating system has been met with reluctance in the marketplace, where users complain it is incompatible with older software and that they are happier with its predecessor Windows XP. Microsoft says Vista is winning acceptance and that it has sold more than 180 million copies of the software, most of it pre-installed in new computers.
"Our Windows business is firing on all cylinders," Ballmer said. "We see tremendous opportunity."
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