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A search advertising partnership with Facebook is the latest trick up Microsoft's sleeve in the software giant's repeated attempt to try and steal search market share from Google. As The New York Times notes, Microsoft has flirted with several strategies of late, including the failed pursuit of Yahoo, the sector's No.2 player, and a new scheme that rewards users of its Live Search service with discounts. In Facebook, Microsoft thinks it has found "a promising source of new users," but Silicon Alley Insider's Peter Kafka claims the move will do little to move the search needle in …

Who will take over for Kevin Johnson as head of Microsoft's online services division? Kara Swisher says there's a movement brewing inside Redmond to give that job to Chief Software Architect Ray Ozzie, who has been credited for coming up with Microsoft's vision of providing "software plus services" via the Web. Why move Ozzie to online services? As Swisher says, some inside Microsoft think there's "no bigger puzzle ... to finally solve now than to figure out how to finally succeed in the online space." Indeed, online services cost Microsoft $1.2 billion in the past fiscal year, double the impact …

PaidContent.org claims AOL is dressing itself up for a sale by slimming down. The Time Warner company on Thursday announced it was shutting down a few of its tech projects as well as a few of the blogs in its Weblogs network. In a letter to staff, Kevin Conroy, AOL EVP of Products and Marketing, said that Bluestring, Xdrive, and AOL Pictures would "sunset" after failing to gain "sufficient traction in the marketplace or the monetization levels necessary to offset the high cost of their operation." Meanwhile, the blog site myAOL will transform from a proprietary platform to open industry …

While some analysts and investors groaned about the lack of news coming out of Facebook's developer conference in San Francisco, GigaOm writer Om Malik was "fairly impressed" with what the company is doing with Facebook Connect. While still short on details, Malik thinks the new program "has a much better chance of succeeding where Microsoft and others have failed." FC offers a simple Web ID authentication system that allows Facebook social interactions to be embedded in other Web sites. Given Facebook's relationship with many of its always-on users, Malik thinks FC "can out-execute Google, MySpace and everyone else with its …

On Microsoft investor day, CEO Steve Ballmer declared that the company was finally "done" with pursuing Yahoo, at least, for now. "There's nothing under discussion between the two of us," Ballmer said. "We had a set of principles, we talked about them, it didn't work out. Fine, we're done. We can move on." So, moving right along, Microsoft's message to analysts and shareholders was that it has a post-Yahoo plan to turn around its online services division and compete with Google, the online sector's runaway leader. "There is this huge, huge, huge new opportunity around the Internet and online and …

Cnet's Greg Sandoval suggests that peace may be near for Google and Hollywood, who have long been at war over the amount of pirated videos that appear on Google's video-sharing site, YouTube. Indeed, if deals like the one announced last week with Lionsgate are any indication, YouTube could soon be the legal home to clips from popular movies and TV shows. Why? Now that Google has ramped up its content filtering efforts, major movie and TV studios are softening to the prospect of having their stuff passed around the video-sharing site, which has an unmistakable brand and an unmatchable reach …

News Corp. President Peter Chernin on Tuesday noted that advertisers haven't fully embraced the opportunities online, particularly in video and mobile. In an interview with Fortune's Richard Siklos, Chernin said advertisers continue to have a television mindset, noting that one recently told a MySpace rep to come back to him when the social network has a "Super Bowl-level" event. The News Corp. president said the advertiser failed to realize that the MySpace homepage has as many viewers every day as the Super Bowl has once a year. Of course, MySpace users aren't paying as much attention to the ads, (this …

As bloggers complained that Facebook announced a whole lot of nothing at its developer conference in San Francisco, developers happily received news of the social networking giant's new application verification process. Closely held Facebook now plans to begin verifying applications in order to allow some developers greater access to Facebook features than others. Jia Shen, co-founder of app maker RockYou, told The Wall Street Journal: "I am really happy they clarified the sorts of applications they want on the site. For a long time, that wasn't clear." Mark Zuckerberg, who keynoted the event for the second year running, also outlined …