Microsoft and Facebook strengthened their existing partnership Thursday with the announcement that Microsoft would be powering the social network's Web search and sponsored links.
The announcement was made at Microsoft's annual financial analysts meeting in Redmond. Sources indicate the search services will be integrated into Facebook without many changes to the overall site design.
Under the agreement, Microsoft will provide Facebook with an application programming interface that will add Windows Live Search directly into the Facebook environment. Facebook users' Web queries will produce search results and paid search ads generated by Microsoft's search engine.
Facebook will begin using an API from Microsoft some time in the fall. The move mirrors a similar deal between Google and MySpace made almost two years ago. The search giant paid $900 million for MySpace's search box and ads.
Google's deal extends across all Fox Interactive sites, which include Rottentomatoes.com, Gamespy.com, fox.com, americanidol.com, and others. In addition to search, Google also has rights to advertising on these sites.
The actual monetary value of Thursday's Facebook deal was not disclosed, although Microsoft previously invested $240 million in the site last October. That deal made Microsoft the exclusive third-party provider for advertising on Facebook.
"We're excited about even using that as an opportunity to further extend the Live Search reach," said Microsoft senior VP Satya Nadella, who spoke Thursday at Microsoft's annual meeting with investment analysts at its Redmond, Wash., headquarters.
Microsoft needs to find new ways to grow its search business in the wake of its failed attempt to acquire Yahoo -- the No. 2 provider of paid search services behind Google. Google controls about 62% of all search traffic in the United States, followed by Yahoo which owns about 21% of the market. Microsoft is in third place with a 9.2% share, according to market watcher ComScore.
Facebook, which claims more than 90 million active users, could help Microsoft increase its share of the market considerably.