Microsoft to buy Web ad firm aQuantive for $6 bln

The aQuantive acquisition reduces the chances of a megadeal with Yahoo, the largest online media company, according to Stifel Nicolaus analyst Scott Devitt. "Microsoft may be more interested in piecemealing together the highest-quality franchises that replicate what Yahoo already has," he said.

A possible deal for Yahoo was seen largely as a way to join forces to slow the growth of Google, which continues to gain market share. Google's revenue grew three times faster than both companies.

Brad Smith, Microsoft's general counsel, said it still wants antitrust regulators to scrutinize Google's DoubleClick acquisition. Microsoft's deal, on the other hand, is a combination of complementary assets and therefore should not raise antitrust concerns, Smith said.

Microsoft beat other competitors for aQuantive, saying there are only a small number of companies with enough advertising assets to help it gain scale in a market that the company sees growing at about 20 percent a year until 2010.

AQuantive, a company founded in 1997, helps advertisers target online ads through its Atlas technology unit and offers Web-site development services through its design agency Avenue A/Razorfish.

It also operates an online ad network that connects buyers and sellers and provides behavioral targeting for advertisers. Microsoft said the deal would allow it to strengthen ties with advertisers, ad agencies and Web site publishers.

The acquisition is the latest in a series of smaller deals Microsoft has been making to extend its capabilities in placing ads on everything from video games to mobile phones to its Internet Protocol television platform.

Last year, Microsoft bought Massive Inc., which places ads in video games, and earlier this month, it acquired ScreenTonic, a European mobile phone advertising company.

(Additional reporting by Ritsuko Ando and Michele Gershberg)