Microsoft Invest – formerly Xandr DSP and formerly AppNexus before that – will soon just be formerly, full stop.
On Wednesday, Microsoft announced that it will shut down Microsoft Invest by March next year.
The DSP will be replaced by a chatbot-style ad-buying product powered by Copilot, Microsoft’s generative AI solution. However, the change only applies to the demand side business. The SSP and publisher ad tech, Microsoft Monetize, will be maintained.
The decision is not wholly unexpected. Microsoft has deprioritized the third-party programmatic business ever since it acquired Xandr from AT&T in 2021. (The deal closed in 2022.) The acquisition was designed to bring the acumen and hands-on ad tech knowledge in-house while avoiding the problematic third-party ecosystem. Similarly, last year, Microsoft Advertising quietly shuttered PromoteIQ, its third-party retail media ad tech business.
Microsoft will still integrate with outside DSPs, Kya Sainsbury-Carter, head of Microsoft Advertising, wrote in a blog post. But the focus will be on how to best connect demand with Microsoft’s first-party assets, like Xbox, Gaming, Bing, Copilot, MSN, Outlook, Edge, Windows, LinkedIn and the Microsoft publisher network.
In that sense, Microsoft is following the trend of other major walled gardens, such as Meta and to a lesser degree Google or Amazon. These platforms all prioritize monetizing their own properties while never allowing internal ID data to reach third-party vendors.
The Trade Desk CEO Jeff Green told investors during the company’s earnings report last week that “we’re not that far away from DV360 just being a buying tool for YouTube. And if I were them, that’s what I would seriously consider doing. All the antitrust headaches come from participating in the open internet and pretending to be objective about what you buy. Why not just be like Facebook and say, ‘Our properties are awesome, and we’re just going to focus on monetizing those.’”
For three years now, Google’s third-party ad network has been on the decline, while YouTube, Google Search and other Google properties grow tirelessly.
Third-party ad tech might be a tendentious part of the ad business, but it constitutes a great deal of risk in the form of scrutiny and potential privacy or antitrust violations. Or that’s the lesson ad platforms got from the DOJ vs. Google ad tech antitrust suit.
Microsoft framed the DSP shutdown next year in the press release as part of its resetting the business around generative AI tech.
“We believe that the future of digital engagement is conversational, personalized, and agentic,” wrote Sainsbury-Carter.
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It is a sad day for the AppNexus DSP, which at one point was the category leader. And even while The Trade Desk surpassed it in terms of revenue, the AppNexus product was known for its depth and sophistication, being geared more toward developers and algorithmic modelers, and with hundreds of engineers. To be replaced by a Copilot chatbot prompt field.
The change means Microsoft Advertising will “harness the full power of AI and our audience intelligence,” wrote Sainsbury-Carter, by leaning on Microsoft’s vast first-party data, first-party media and first-party LLM, Copilot.
“Our commitment to more private and personalized advertising experiences for a more agentic and conversational world is not achievable with the industry’s current DSP model which, therefore, no longer aligns with our investment in this future,” she wrote.
