The man charged with reviving Microsoft's struggling online business and spearheading its fight against Google is to leave the software company, it emerged last night.

Kevin Johnson, who was in charge of the online services group at software giant and a member of the company's senior leadership team, is leaving to become chief executive of Juniper Networks, a maker of networking hardware.

Announcing the departure, Steve Ballmer, Microsoft's chief executive, said the two business overseen by Mr Johnson - online services and the Windows operating system unit - would be separated as part of a major management shake-up.

Microsoft would now conduct a search "spanning internal and external candidates" to fill "a new senior lead position", Mr Ballmer said, acknowledging that internet search - which holds the key to online advertising revenue, and in which Microsoft lags a distant third behind Google - was "a very competitive arena".

Microsoft has invested heavily in its online services group - which includes its search and advertising services as well as the MSN portal - but has struggled to make the unit profitable, or gain any ground on Google, which performs 87 per cent of all searches conducted in the UK.

In the most recent quarter, revenue from online services grew by 24 per cent to $838 million, but the business's loss for the quarter more than doubled, to $488 million.

Mr Johnson, 47, joined Microsoft in 1992, and rose to become group vice president in charge of the company's sales and marketing operations. He was a member of the 10-person team which decided high-level strategy, and was integral to the company's $44.6 billion bid for Yahoo!, which it made in February.

After months of talks, the two sides failed to reach agreement, even though Microsoft's bid had the backing of Carl Icahn, the billionaire activist shareholder who this week was appointed to Yahoo!'s board.

Microsoft has suggested that it no longer wishes to buy the whole of Yahoo!, though it may be interested to acquire the company's search business.

In a statement, Microsoft said that the Windows division which Mr Johnson headed up would now be run by three senior vice presidents - Steven Sinofsky, Job DeVaan and Bill Veghte - who will report directly to Mr Ballmer. They will oversee the development of the next version of Windows, as well as a new version of the company's web browser, Internet Explorer.

Online services would be broken off as a separate division, which while the company searched for Mr Johnson's replacement would be run by another senior executive, Satya Nadella.

In a memo reportedly circulated to employees yesterday, Mr Ballmer vowed to "out-innovate" Google in internet search by "upping the ante" in research and development, as well as by making acquisitions. "This is a long-term battle for our company," he wrote.

Mr Johnson has several times considered the idea of leaving Microsoft, and in 2005 for instance pondered a move to a top sales job at Hewlett Packard. A colleague told the New York Times that Mr Johnson had ambitions to become a chief executive - an unlikely prospect at Microsoft, given that Mr Ballmer is 52.

In a statement, Mr Johnson said Microsoft was "a special place" which "presents opportunity to so many." Juniper Networks, the company he leave to join, makes networking hardware alongside competitors such as Cisco Systems.

Microsoft shares closed up 2.5 per cent at $26.43 yesterday.

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