Microsoft and Facebook in Web ad deal

(Reuters) Facebook and Microsoft Corp on Wednesday said the world's largest software maker will become the exclusive provider of banner advertising and sponsored links on the social networking Web site as part of a strategic alliance.

The two companies began talks last week and expect the new ads to appear in early fall. Terms of the deal were not disclosed.

"We believe that the combination of Microsoft and Facebook strengths will be incredibly attractive to advertisers as they forge more meaningful connections with one of the largest, most engaged audiences on the Internet," Steve Berkowitz, senior vice president of the Online Services Group at Microsoft, said in a statement.

Closely-held Facebook, founded in February 2004, has more than 9 million registered users and ranks as the seventh-most trafficked site in the United States.

Microsoft's deal with Facebook comes on the heels of a similar agreement between social networking site MySpace.com and search engine Google Inc.

On August 7, News Corp.'s Fox Interactive Media and Google signed a multi-year search and advertising deal covering Fox's MySpace.com and other properties.

As part of the deal, Google is expected to pay Fox at least $900 million in revenue share payments based on certain traffic and other commitments promised by Fox.