Web 2.0 Conference, San Francisco--Microsoft confirmed today that it has integrated Twitter tweets and Facebook status updates into its Bing search results. After a morning of speculation triggered by several blog posts predicting the news, Qi Lu, president of Microsoft's online services division, confirmed that the search deal had in fact taken place.

Microsoft's VP of Microsoft's online audience business group, Yusuf Mehdi, took the stage here to "demonstrate" the answer in what he called Bing "Wave 2".

"We are going to get access to all the public Twitter information in real time," Mehdi said, underscoring the breadth and implication of the deal. As for the Facebook deal: "The other deal we have done will come with all the publically available data on Facebook, and services from that will come at a later date."

In the brief product demo, Mehdi showed a basic search in Bing for the name of a celebrity. Bing uses a set of algorhythms to bring you the most popular, relevant and useful tweets on the subject. The search results display the most recent tweets about the celebrity, as well as the most re-tweeted tweets. If there is a link contained in the tweet, Bing helpfully shows you the full URL of the place that link will take you--before you click it.

Mehdi also demonstrated that you can now view entire Twitter feeds from inside Bing--no need to bounce over to Twitter. Bing also now features a tag cloud demonstrating the up-to-the-minute hottest topics on Twitter.

While none of the companies involved in today's news would comment very much on the terms of the deals, the New York Times reports that Microsoft paid Twitter for the right to integrate tweets into Bing.

Microsoft's Lu also confirmed that Microsoft's deal with Twitter is non-exclusive. That's important because Google has reportedly also been in talks with Twitter about integrating tweets; so such a deal can and may still happen.

You can check out the Bing/Twitter development so far by visiting www.bing.com/twitter.