Microsoft shuttering Xandr Invest suggests Big Tech is shrinking from the open web

Last week, Microsoft Advertising told clients it would stop supporting its demand-side platform, Xandr Invest, starting in February. This was an apparent echo of the planned closure of Microsoft’s retail media network, PromoteIQ, as it appears to be consolidating its online advertising offering.

‘More private and conversational’

Microsoft Advertising corporate vp Kya Sainsbury-Carter claimed the traditional DSP model no longer supports its goal of delivering “more private and conversational” ad experiences to “deliver profitable growth for our clients and partners” and further her business unit.

EMarketer forecasts that Microsoft Advertising is the seventh-biggest media firm globally —approximately half of its revenue is from Bing Ads — and its latest financials confirm that media revenues surpassed $20 million in 2024.

However, consolidating efforts into the Microsoft Advertising Platform, which it sees as critical to its AI-first strategy, along with supporting access to Microsoft and partner inventory through third-party DSPs, presents a quandary.

From February, advertisers will be able to use Xandr Monetize, i.e., what was AppNexus, plus Microsoft’s curation platform to service their owned and operated properties — a sign that it wants to keep a toe in the open web.

Some believe this is because it means Microsoft can continue to extract higher-margin revenue and limit its exposure to privacy concerns via data leakage. Meanwhile, others wonder if leaving a path open to data signals from the open web means it can buttress its AI business.

Furthermore, some have questioned the fate of the remainder of the AppNexus assets, i.e., Microsoft obtained when it purchased Xandr from AT&T for a reputed $1 billion in 2022, with some questioning if it may look to divest such assets.

Either way, the coming changes reflect Microsoft’s ambition to differentiate from legacy ad tech and better compete with industry leaders.

Some in the sector have assessed Google’s current predicament and concluded that it will do likewise, but with caveats.

Google backs into its Walled Garden?

Speaking last week ahead of Microsoft’s announcement, The Trade Desk CEO Jeff Green told DMS by LUMA attendees that he expects Google to eventually perform similar maneuvers as a result of remedy negotiations pertaining to its ad tech antitrust trial.

“I do believe that’s in their best interest,” he said. “I think there’s two centers of gravity: either you head towards competition and the open internet, or you head towards the Facebook model of doing business [on O&O properties such as Instagram].”

Per Green’s assessment, Google’s historic approach to the advertising business, i.e., playing on both the open and its O&O properties such as YouTube, etc., is now under threat because of disruptors such as OpenAI or Perplexity.

“We are looking at the end of an era for Google, in the same way that Steve Ballmer stood up and said, ‘This company rises or falls with Windows’ [in a famous 2001 address],” he said. “I believe [Google CEO] Sundar [Pichai] should be saying, ‘If there is no search, if there is no search monetization, there is no Google.’”

According to Green, such a development will be a rising tide that raises all boats, i.e., independent ad tech and publishers alike.

However, it also raises questions about the fate of independent DSPs. Several sources at such outfits, who requested anonymity, told Digiday their sales teams would attempt to pounce on the market exit of a scaled player such as Microsoft, although many believed many buyers would default to scaled independents such as The Trade Desk.

For some, the sub-narrative of independent DSPs and their traditional partners, i.e., SSPs, now fighting over “curation” will play a role in such a debate, especially as this development means the formerly distinct lines between the two are now blurred.

According to Zach Rosen, founder and principal at consultancy Supvernova, the latest development represents a seismic shift with audience decisioning increasingly taking place on the sell side of the industry.

“In the last quarter, I’ve observed this skepticism evolving into curiosity,” he said in an emailed statement, adding that every player in the sector will have to update their strategy in such a context.

“I predict we will see more publishers thinking of themselves as curators and incorporating this strategy into their sales efforts. Why? Media planning, data activation, and deal optimization have become entrenched on the sell side. This presents new opportunity for publishers to retain greater control over their audiences and establish performance-oriented relationships with their advertisers.”