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Microsoft will no longer handle display ads on Facebook, as the companies rejiggered the advertising pact they announced in 2007 when Redmond stuffed $240m into the social-networking site.

"We made the mutual decision that Facebook would take over responsibility for selling display advertisements on its own site," reads a blog post from Microsoft Bing general manager Jon Tinter.

"Given the kinds of advertisements that make sense within a product as unique as Facebook, it just made more sense for them to take the lead on this part of their advertising strategy."

But Microsoft will continue to provide search technology on Facebook, including search ads. "Our two companies will soon provide Facebook users with a more complete search experience by providing full access to great Bing features beyond a set of links, including richer answers combined with tools that help customers make faster, smarter decisions," the post continues.

The two will also expand their search partnership beyond the US, providing Redmondian search tools to all Facebook users worldwide. And Microsoft will remain the exclusive search on Facebook.

Facebook recently halted Microsoft display ads overseas, and now the two companies have agreed to do the same in the US. In a statement passed to Cnet, Facebook indicated it wasn't happy with the way display ads perform on the site. It prefers the "engagement ads" that dovetail with its so-called social-networking tools.

"Ad formats that feature social actions perform better and provide a better user experience since they are more consistent with the look and feel of Facebook," the statement said.

In October 2007, Microsoft invested $240m in Facebook for a 1.6 per cent stake in the company. That put the ostensible value of the social networking site at $15bn - a ridiculous figure even by Silicon Valley standards. ®

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