Yahoo Inc CEO Carol Bartz said she does not believe Yahoo needs to discuss Google Inc's Internet search practices with government regulators.

Bartz said Yahoo's recent deal to combine parts of its search business with Microsoft Corp is the best approach for competing with Google, the world's No. 1 search engine which has recently raised antitrust scrutiny by European regulators for its search ranking practices.

I think for the most part the markets work and I'd rather be competitive in the market, Bartz told reporters at a special briefing at Yahoo's Sunnyvale, California headquarters on Tuesday.

The way we've weighed in is we want to combine these markets, so we've already established our point on that, Bartz said. She declined to say whether she felt any of Google's search practices actually raise antitrust concerns.

The comments are in sharp contrast to Microsoft's. The software company published a post on its blog on Friday that called Google's actions potentially anti-competitive and urged victims to file complaints to regulators.

Google acknowledged last week that the European Commission had informed it of complaints from three Internet companies about its practices. One of them is owned by Microsoft, Google noted, and the other is a member of an organization backed by Microsoft.

Speaking to reporters at a lunch briefing to celebrate Yahoo's 15th anniversary on Tuesday, Bartz commented on various parts of Yahoo's strategy and business a little over one year into her tenure as CEO.

Responding to a question, Bartz said she thought Yahoo may have been asked by U.S. regulators about Google's proposed $750 million purchase of mobile advertising company AdMob. However, Yahoo would not have progressed forward on our own to contact regulators, she noted.

Bartz said Yahoo was increasing its headcount and was looking for interesting acquisition targets, following a year of layoffs and divesting businesses such as online job recruitment site HotJobs and email service Zimbra that were considered outside its focus on Web media and entertainment.

Bartz said she was not seeking to sell any large parts of the Yahoo business and was instead focused on acquiring small companies with 100 or fewer employees that could help broaden Yahoo's audience or flesh out its online advertising capabilities.

While Yahoo is facing increasing competition from social networking sites like Facebook, which replaced Yahoo as the second most popular website in the United States according to one recent study, Bartz said Yahoo was large enough that it did not need to chase new users at any cost.

The fight to get another user is too expensive. It's the fight to get the ad dollars around relevant users that I want to win, she said.

She said Yahoo's recent $100 million advertising campaign had proven successful in many overseas markets but acknowledged that it didn't work that well in the United States.

I think we didn't have a good call to action, she said.

Bartz also said she was concerned by some the Internet policies and laws among European countries in the wake of last month's ruling in Italy holding several Google executives responsible for a video posted on the company's YouTube site.

The countries are kind of weaving their own stories on some of this stuff, Bartz said.

(Reporting by Alexei Oreskovic; Editing by Richard Chang)