OSD revenue increased primarily as a result of growth in online advertising revenue. Online advertising revenue grew $55 million or 13% to $473 million, reflecting higher search and owned and operated display advertising revenue, offset in part by decreased third party advertising revenue.
OSD operating loss increased due to higher cost of revenue and research and development expenses, offset in part by increased revenue. Cost of revenue grew $74 million driven by costs associated with the Yahoo! search agreement, partially offset by decreased online traffic acquisition costs. Research and development expenses increased $61 million or 27%, primarily due to headcount-related expenses related to the search portion of the business.