Microsoft's failure to acquire Yahoo increased pressure on its executive to find better ways of catching up with Google Inc., which is currently leading the Internet advertisement business.
Microsoft Chief Executive Officer, Steve Ballmer, officially withdrew the bid for Yahoo, over the weekend, a deal which had been viewed as one of the best ways for Microsoft to make progress against Google in the online advertisement business.
Yahoo rejected the $50 billion offer from Microsoft.
Microsoft is now faced with a task of finding a better alternative that can help it achieve its vision of leading the Internet advertisement business which is dominated by Google and Yahoo respectively.
Google Inc. owns the most popular Web search engine and takes the biggest share of the advertising revenue compared to other companies in the same business.
A report from a Virginia based research company, ComScore Inc., showed that Google had 10 percent points of market share in Internet queries since June, and provided 59.8 percent of the searches done in March this year.
The acquisition of Yahoo would have helped Microsoft to more than triple its share of U.S. online searches and would have propelled it to become the largest seller of graphical-displayed adverts on the internet.
Microsoft's decision pushed its shares high by 2.8 percent or 81 cents in New York on the Nasdaq Stock market, after posting a decline of 18 percent in the past weeks on concerns of declining sales for its Windows software which runs more than 90 percent of the world's personal computers.
There are speculations of what step Microsoft will take to catch up with Google but some analysts predict that it will pursue some other acquisitions like Time Warner's AOL, in an effort to win more Internet visitors or it may go for News Corp.'s MySpace social networking site.
Yahoo rejected Microsoft's offer saying that it wasn't enough and stressing that the firm's rank in the U.S. search market and its Asian operations warranted a higher bid.