Posted July 25, 2007 4:20 pm by with 8 comments

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Kevin Rose has announced Digg has decided to drop Google in favor of a 3-year exclusive deal with Microsoft.

Hey everyone ? I wanted to give you a heads-up before the official announcement is made later today. We?ve signed on Microsoft as our new partner to sell and serve the ads on Digg. It?s a deal similar to the one Facebook signed with Microsoft last year.

This move gives us an advertising partner with a larger organization and a more scalable technology platform to keep pace with Digg?s growth. Best of all, it lets the Digg team completely focus on new feature development. Federated Media, which has been an awesome partner for the last year and a half, will continue working with Digg focusing on integrated sponsorships and custom programs like the Arc project in labs.

Microsoft will provide display and contextual advertising on Digg, with Federated Media filling in the blanks. Any doubts that Microsoft dangled a revenue share that was too tempting to turn down? If Microsoft can announce a few big deals like this – even if they don’t make a dime on them – other networks will take notice and come knocking.