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Digg Fires Google for Online Ads

Digg Inc., a reader-powered news site, fired Google Inc. as its online advertising partner Wednesday in favor of a company Digg's top executive described as young and willing to take risks: Microsoft Corp.

"We at Digg couldn't think of a better partner to get to where we need to go," said Jay Adelson, the company's chief executive officer. "They're a young ad service, they're innovative, they're willing to work with us on the cutting edge."

For three years, Microsoft will deliver ads -- mostly small, contextually relevant text links -- on Digg.com.

More than 9.5 million people visited the site in June to read, suggest a story or help vote a favorite onto a list of top news, according to data from comScore World Metrix. Digg competes with similar sites including Reddit.com, acquired last fall by magazine publisher Conde Nast, and Netscape, which is owned by Time Warner Inc.

The companies did not disclose financial terms of the deal. Google declined to comment.

Digg is the first high-profile customer for Microsoft's adCenter platform since the company signed up Facebook, a popular social networking site, last summer.

Microsoft executives are looking to Digg and the pending acquisition of aQuantive Inc., an online advertising company, to boost adCenter's appeal with advertisers and close the gap with Google, the leader in making money from search advertising.

"We actually now are in the forefront of what we believe is going to be the next generation of advertising," said Steve Berkowitz, a senior vice president in Microsoft's online services group.

Berkowitz said Microsoft is working on technology and design ideas for "bringing users to engage with the advertising more, make them part of it."

Digg's decision to defect may not dent Google's balance sheet, but it's still a blow to lose such a hot Web 2.0 property, said Chris Winfield, president of social media marketing company 10e20 LLC.

With Digg and Facebook under its belt, Microsoft may be able to seal deals with other social networking sites. For Digg, though, the decision could backfire.

"Linux and Apple have always been two of the most popular things on Digg, while Microsoft, the RIAA, things like that, have been two of the most hated things," Winfield said.

"For a user, they look at it and say, 'Now, all of a sudden, you're doing a deal with the devil?'"

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