AT&T Image

Microsoft reached a deal to acquire AT&T’s advertising technology division, Xandr, seeking to strengthen its own advertising business as the industry shifts away from online tracking technologies.

AT&T has reportedly been seeking to divest Xandr since earlier this year, part of a broader effort to slim down its business. The telecom giant is separately spinning out its WarnerMedia business in a merger with Discovery.

Xandr will help Microsoft develop an ad tech platform for “a post-cookie world,” says Mikhail Parakhin, Microsoft’s President of Web Experiences, in a blog post, referring to the tech industry’s shift away from tracking technologies that target ads based on a user’s online activity. He said their approach “respects consumer privacy preferences, understands publishers’ relationships with consumers and helps advertisers meet their goals.”

Microsoft, which owns the Bing search engine and LinkedIn social network in addition to Xbox and other media properties, wants to position itself to compete more effectively with Google, Facebook and others in online ads. The Redmond company reported $2.7 billion in search and news advertising revenue in the September quarter, up 37% from the same period the year before.

AT&T launched Xandr in 2018, combining its data and analytics business with technologies from its acquisition of digital and TV ad marketplace AppNexus. The name “Xandr” is an homage to AT&T founder Alexander Graham Bell.

Financial terms of Microsoft’s agreement to acquire Xandr were not disclosed in the announcement Tuesday morning, and a spokesperson for Microsoft declined to provide further details. The companies say the acquisition will require customary regulatory approvals. They did not provide a timeframe for completing the deal.

AT&T Graphic

AT&T reported more than $2 billion in revenue for Xandr in 2019 but has not given detailed financial results for the unit since then. Axios reported in July that Xandr was losing “tens of millions a year and has been grossly mismanaged by AT&T,” citing unnamed sources. At the time, Axios said, AT&T was in talks to sell Xandr to Indian ad tech giant InMobi.

AT&T says in a footnote on its news release that the Microsoft acquisition not include the DirecTV ad sales business.

It’s the latest effort by Microsoft to expand its advertising business via acquisition, dating back to the company’s $6.3 billion acquisition of aQuantive in 2007, which went so poorly that Microsoft was forced to take a giant writedown.

Like what you're reading? Subscribe to GeekWire's free newsletters to catch every headline

Job Listings on GeekWork

Find more jobs on GeekWork. Employers, post a job here.