Microsoft retires Xandr DSP, aligns ad strategy with AI-centric future

Microsoft Advertising is set to close its demand-side platform (DSP), Xandr Invest, as part of a broader strategic pivot towards AI-powered solutions. The company informed clients of the decision on Wednesday, 14 May, stating the current DSP model no longer aligns with its AI-led advertising vision, according to sources familiar with the matter.

The sunsetting of the platform will take effect on 28 February 2026. The move is expected to result in layoffs, with affected employees reportedly being notified on the same day. 

“Our commitment to more private and personalised advertising experiences for a conversational and agentic world is not achievable with the industry’s current DSP model,” reads a document shared mentioned in a media report. “As a result, we will no longer support buying media through our Invest DSP.”

Instead, Microsoft will consolidate its ad tech offerings under a unified AI-driven Microsoft Advertising Platform. The company said it remains committed to platform stability and client support during the transition, with a focus on its sell-side tools, Microsoft Curate and Microsoft Monetize, to drive growth for publishers and partners.

Microsoft has increasingly prioritised AI across its advertising suite, including tools within Copilot that allow advertisers to generate creative assets such as text, images and videos. It has also restructured its retail media strategy, winding down PromoteIQ in favour of a partnership with Criteo.

The move marks a decisive step in Microsoft’s efforts to compete in an AI-first advertising environment, aiming to shift away from legacy programmatic infrastructure and towards more dynamic, conversational ad experiences.

Microsoft Advertising is projected to generate over $17 billion in revenue in 2025, according to eMarketer, positioning it as the seventh-largest advertising business globally.

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