Officially announced of June 29th, Microsoft Corp. (NASDAQ: MSFT) announced that AOL Inc. will now be looking after its display advertising business. The company decided to hand over the business to AOL in an attempt to manage its operations that are failing at generating enough revenue. AOL will now be looking into selling display ads for Microsoft in seven global markets apart from the US, Canada and the UK. The company's ads will be sold for both its desktop and mobile apps like Skype and Xbox. They will also be played on both AOL and Microsoft's websites like TechCrunch, the Huffington Post and Engadget.
AOL was recently acquired by Verizon (NYSE: VZ) for $4.4 billion.
With effect from January 2016, AOL will change its default search engine to Bing. It is expected to help Microsoft in expanding its reach and gaining a bigger share in the market. Google (NASDAQ: GOOG) is the default search engine of AOL presently. Competing with Google is undoubtedly going to be difficult for Bing, but the company has been growing its search engine organically (it presently covers 20 percent of the market).
No job loss
Now that AOL will be taking over a major business of Microsoft, do employees of the company have a reason to worry about layoffs? Luckily, no. Microsoft has confirmed that its employees working in its display ad department world-over will be given the opportunity to transfer to AOL. There won't be any layoff in either of the companies because of the new 10-year deal. AOL has also agreed to extend over 1000 job offers to Microsoft employees in different departments like sales, engineering and marketing. AOL is likely to gain significantly from the deal as it will get direct access to the youngest, tech-savvy users of Microsoft.
Beneficial deal for both the parties
The newly-formed deal, which is to last a decade, is expected to strengthen the market standing of both the companies. Both Microsoft and AOL are well-known companies and have been offering services since past 40 and 32 years respectively. Among Microsoft's most popular online digital destination is MSN (portal), while it is the Huffington Post for AOL. However, both of them are facing competition from new companies like Facebook (NASDAQ: FB) and Google.
Apart from handing over a major part of its business to AOL, Microsoft will also be selling a part of its technology used for generating maps to Uber.