Source: Microsoft to expand Facebook ad pact

By Eric Auchard

updated 2:05 p.m. ET July 24, 2008

SAN FRANCISCO - Microsoft Corp. will announce plans to expand its relationship with online social network Facebook to provide web search and search advertising, a source familiar with the matter said on Thursday.

(Msnbc.com is a joint venture of Microsoft and NBC Universal.)

The expanded deal follows Microsoft's decision not pursue a takeover of Yahoo Inc. to bolster its online search and advertising business as it tries to compete with Internet leader Google Inc.

Microsoft bought a 1.6 percent stake in fast-growing Facebook for $240 million in October, beating out Google in the investment. At the time, it reached an exclusive deal to sell ads on Facebook outside of the United States.

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