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August 23, 2007

Microsoft Facebook alliance hits a rough spot?

Posted by David Hunter at 2:57 PM ET.

Almost exactly a year ago, Microsoft and the much hyped Facebook social networking Web site announced “a strategic alliance” around advertising which had them collaborating to bring relevant advertising to Facebook users and:

As part of the relationship, Microsoft will be the exclusive provider of banner advertising and sponsored links on Facebook using Microsoft’s digital advertising solutions and the Microsoft adCenter platform. The two companies also agreed to work together on future technology and advertising initiatives.

Admittedly it was a rushed marriage, but now according to a Wall Street Journal report, Facebook seems to want to go its own way:

Social-networking Web site Facebook Inc. is quietly working on a new advertising system that would let marketers target users with ads based on the massive amounts of information people reveal on the site about themselves.

Eventually, it hopes to refine the system to allow it to predict what products and services users might be interested in even before they have specifically mentioned an area.

As the industry watches the Palo Alto, Calif., start-up to see if it can translate its popularity into bigger profits, Facebook has made the new ad plan its top priority, say people familiar with the matter. The plan is at an early stage and could change, but the aim is to unveil a basic version of the service late this fall.

The privacy folks are going to love that, but where’s Microsoft?

But Facebook’s new plan faces hurdles. It could upset Microsoft, which is itself trying to build technology to make it easier for advertisers to place targeted ads on Facebook. A Microsoft spokeswoman declined to comment on this issue.

Looks like the honeymoon is over.

Filed under Advertising, Coopetition, Facebook, General Business, MSN, Microsoft, adCenter

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2 Responses to “Microsoft Facebook alliance hits a rough spot?”

  1. Cash burning a hole in Microsoft’s pocket? -- Microsoft News Tracker Says:

    [...] All these rumors are good fun, but the ascribed motivations for the players seem to be rather thin to my mind, particularly for Microsoft. The Yahoo acquisition is nearly impossible to justify, and while buying 5% of Facebook might possibly be a good investment irrespective of other benefits, it seems like a stretch to claim significant value from such a deal that would preempt any Microsoft social network developments and might well fund Facebook’s development of its own ad technology.   [...]

  2. Microsoft and Google in Facebook bidding battle? -- Microsoft News Tracker Says:

    [...] I’ve previously found the purported rationales for this rumored Microsoft-Facebook deal a trifle wacky, but I guess common sense goes out the window when you are a slave to fashion. Presumably the best way to look at it is as just another eyeball auction although the the precise nature is unclear given Microsoft’s current “strategic advertising alliance” with Facebook and Facebook’s own advertising initiatives which seem just about to bear fruit.

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