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From P-I reporter John Cook, cross-posted from his Venture Blog:

Michael Toutonghi is headed back to Microsoft after selling his Seattle Internet startup WebFives to the software giant in a deal of undisclosed size.

Toutonghi described the deal as an asset sale, declining to comment when asked if it was a positive financial result. "I am happy with the outcome," said Toutonghi, who launched the startup under the name Vizrea in early 2006.

WebFives, which allowed users to share videos, photos and other Web content between devices, will be shut down by the end of the year. Some of the technology will be incorporated into Microsoft services. WebFives/Vizrea raised about $4 million in funding, with some of the capital provided by former Microsoft executives Brad Chase and Ben Slivka.

But facing competition in the digital media sharing arena, neither service really caught on.

"It was more the technology value than the user base," said Toutonghi.

Toutonghi, a former distinguished engineer at Microsoft who served as vice president of the eHome division, will return to work for the software giant as a technology fellow working on the company's advertising platform. The 45-year-old will be based in Prague, where he owns a home. Microsoft also operates an office in Prague with about 250 people, though it does not have a focus on software development. With Toutonghi's new role, it could lead to bulking up development efforts there, he said.

Toutonghi said he is glad to be back at Microsoft, saying he learned how difficult it is to scale a startup business.

"I love working on technology platforms ... that make a huge difference," he said.

Given Microsoft's push into the online advertising arena, Toutonghi will have a lot to work on in the coming months.

Microsoft didn't comment on the deal Friday evening.