May 23 (Bloomberg) -- Microsoft Corp., after agreeing last week to pay $6 billion for AQuantive Inc., played down a possible deal with Yahoo Inc. and said it has everything needed to build its advertising business.

``We have all of the pieces we need to move forward'' and be one of the top ad platforms, Yusuf Mehdi, Microsoft's chief advertising strategist, said today at a Goldman Sachs Internet conference in Las Vegas when asked about an acquisition of Yahoo.

Microsoft, the world's largest software maker, has held talks with Yahoo about a partnership to develop Web search and advertising programs to fight Google Inc., people briefed on the discussions said earlier this month. When asked if Yahoo had assets that might help Microsoft, Mehdi said ``no'' and cited recent purchases, including AQuantive, its largest ever.

``Yahoo has a great business, they have a great audience asset. Kudos to them in terms of the users and reach they've got,'' Mehdi said. ``From where we are today, we think we have all of the pieces. There are other small pieces that we're in the process of getting to as well, organically or otherwise.''

Shares of Redmond, Washington-based fell 11 cents to $30.58 at 4 p.m. New York time in Nasdaq Stock Market trading. They have risen 2.4 percent this year.

`Game Changer'

Microsoft and Sunnyvale, California-based Yahoo have struggled to dent Google's dominance in online searches and in the booming market for advertising spots next to search results. Combining with Yahoo would triple Microsoft's share of the U.S. search market to 38.4 percent, rivaling Google's 48.3 percent, according to ComScore Inc.

The acquisition of AQuantive, owner of the largest online ad agency, is a ``game changer'' for us as sales of Internet advertising rise, Mehdi said.

Online ad sales rose 35 percent to $16.9 billion in the U.S. last year, the Interactive Advertising Bureau said today, citing a survey conducted with the accounting firm PricewaterhouseCoopers LLP. Fourth-quarter Internet ad spending reached a record $4.8 billion, a 33 percent gain. The Web accounted for 5.9 percent of all U.S. ad spending, up from 4.7 percent in 2005, the bureau said.

Microsoft is readying new features for its service that will give Mountain View, California-based Google ``a run for their money,'' Mehdi said.

``Google has a good product, has a good brand,'' he said. ``If you want to displace them, you can't just match. You have to do something big and bold and different.''

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net.

Last Updated: May 23, 2007 16:03 EDT