Two days after eBay's decision to drop support for two key .NET applications, Microsoft continues to stand behind its single sign-on Passport service in comments to the media. But BetaNews has learned Microsoft has no plans to renew contracts for Passport with third-party sites.

Microsoft's initial comments Wednesday evening to BetaNews were quite vague as to the company's true position on the future of Passport.

"Over the past few years, we've learned a lot working with partners and customers using Passport, and our commitment to provide partners with secure and flexible authentication service continues," a company spokesperson told BetaNews. "That said - the primary value of single sign in authentication services is determined by related parties."

But was Microsoft admitting that by losing eBay, as well as several other high-profile Passport clients in recent months, Passport was no longer a priority in Redmond? Hardly, Microsoft said in a response to that question and others on Thursday.

"Passport continues to be a critical service for Microsoft and MSN and that the changes with Passport that we are seeing are really an evolution," the spokesperson said. "Passport continues to be one of the largest authentication systems in the world."

Outside of Microsoft, however, the story is different. The focus on Passport has been moved internal, with the sign-on service powering Microsoft-owned services and only its closest MSN partners. In a telling sign, Microsoft removed a directory of sites using Passport.

"We see Passport providing value primarily to Microsoft sites and to our strategic partners in the future," the spokesperson said to BetaNews.

Matt Rosoff, analyst with Directions on Microsoft, explained that Passport is no longer associated with the current .NET strategy. "Microsoft has told me that Passport is not going to be offered to third-party sites once existing contracts expire. Rather, it will only be used on MSN and MSN-partner sites," said Rosoff. "Therefore, eBay's decision is expected and has no impact at all on .NET."

Joe Wilcox, senior analyst with Jupiter Research, is not surprised by Microsoft's recent moves with Passport. "Remember that Microsoft intended Passport to anchor a suite of online, consumer Web services that the company later nixed. Then Microsoft settled with the FTC over Passport privacy issues," he said.

Wilcox believes that the retreat of Passport is only a prelude to a repositioning of the service itself. "In the future, I expect Microsoft to emphasize federation and greater Passport interoperability with other identity mechanisms. Passport won't go away, but pull back to Microsoft sites and services."