Microsoft shutters Xandr, pivots to AI-driven ad platform

The adtech world is churning, caught in an “AI arms race” and a deliberate turn towards first-party data and owned media. This forces major players to innovate, squeezing legacy programmatic platforms. Microsoft is now making its own decisive play, fundamentally recalibrating its advertising direction.

Xandr’s exit: Microsoft confirmed it will shutter its Xandr Invest demand-side platform (DSP)—once the pioneering AppNexus—by early 2026. The company told clients and announced in a May 14 blog post that this closure paves the way for consolidating investments into a new, singular AI-powered ad-buying platform woven into its Copilot assistant. “Our commitment to more private and personalized advertising experiences for a conversational and agentic world is not achievable with the industry’s current DSP model,” Microsoft stated.

AI-powered vision: The tech giant pictures a future of “conversational, personal, and agentic” advertising, a goal its new Microsoft Advertising Platform is built to achieve. “We are entering a new era — one defined by conversational AI experiences, agentic systems that simplify decision making and bring brands closer to people,” Microsoft detailed. Its new platform will lean on a chatbot-style interface for managing campaigns and will tap into Microsoft’s rich first-party data from assets like Bing, Xbox, and LinkedIn.

Industry impact: The end of Xandr Invest, a former category leader as AppNexus, closes a chapter for a foundational programmatic technology. The move also points to more ad tech consolidation and spells out the tough road for standalone DSPs in a fiercely competitive, AI-first market.

Strategic turn: The decision follows Microsoft’s 2021 buyout of Xandr and a steady deprioritization of its third-party programmatic arm, including the earlier closing of its PromoteIQ retail media unit, AdExchanger reported. By concentrating on its own AI muscle and media properties, Microsoft mirrors a strategy evident at other tech titans like Google and Meta, who increasingly favor their walled-garden approaches. Microsoft will, however, keep supporting access to its inventory through third-party DSPs that align with its standards.

Road ahead: Microsoft promises a “smooth transition” for Xandr clients, providing support as they shift to the new AI-driven platform, which touts features like “Showroom ads” and performance insights. The industry will watch intently as this AI pivot attempts to reshape Microsoft’s advertising fortunes and the wider competitive field.