The news: Microsoft’s advertising business delivered a strong showing in Q2, with search and news advertising revenues rising 21% YoY; for comparison, in the most recent quarter, Google’s ad business grew just 10.4%.

This growth was driven by continued improvements in AI-powered search relevance, monetization gains from Copilot integration in Bing, and increased usage of the Edge browser, particularly in enterprise settings.

Advertising is becoming a meaningful contributor to Microsoft’s top line, even as the company’s larger cloud and software units remain the spotlight acts. During its earnings call, Microsoft credited AI enhancements across its ad stack for improving click quality, targeting, and return on spend—factors that are resonating with performance-focused marketers.

Meanwhile, Edge is quietly gaining share. While still modest compared to Chrome or Safari, its user growth is feeding Microsoft’s ad business by expanding query volume through Bing.

Why it matters: For years, Microsoft’s ad ambitions were often dismissed as a side hustle next to Google’s dominance. But the numbers suggest that’s changing. A 21% jump in ad revenues, driven by both search and browser adoption, signals that Microsoft is building a credible advertising engine with first-party data from Windows, Office, and LinkedIn.

Edge plays a subtle-but-important role: Microsoft is regaining control over the default search experience for millions of users, particularly in work contexts. That’s valuable real estate in a market where privacy policies and tracking restrictions are narrowing ad reach elsewhere.