The new business unit, dubbed the Search and Ad Platform Group, will encompass both the consumer and advertiser ends of Microsoft's search engine. Microsoft has an uphill battle against entrenched opposition, facing larger advertiser spends and a low consumer market share when compared to rivals Yahoo and Google.
In addition to managing the growth of Microsoft's search consumer and ad product, Nadella will head up the ad platform's integration into other Microsoft properties, like mobile, Office Live, Xbox Live, the Zune, and Windows Media Center.
"Aligning Search and our Ad Platform efforts under a single R&D leader is essential as we drive advances in our search, commerce, and payments infrastructure, and evaluate change-the-playing-field opportunities," a Microsoft spokesman said.
"We must also move forward aggressively in considering how and where Search and ad-supported offerings fit within and across the entire Microsoft product and services portfolio," he added.
Prior to heading up the Search and Ad Platform Group, Nadella was in charge of Microsoft's business software product brand. In his new position, he will report to Kevin Johnson, president of the platforms and services division. Nadella declined to comment directly.