June 19 (Bloomberg) -- Microsoft Corp. lost Internet search users in the U.S. to Google Inc. and former takeover target Yahoo! Inc. last month, research firm ComScore Inc. said.

Microsoft, the world's biggest software maker, handled 8.5 percent of queries in May, down from 9.1 percent the month before, Reston, Virginia-based ComScore said today in a statement. Google extended its lead to 61.8 percent, and Yahoo grew to 20.6 percent, ComScore said.

The companies are vying for a bigger piece of the $41 billion online advertising market. Microsoft's talks to buy Yahoo's search business for $1 billion ended last week, around the time Yahoo struck a deal to show some Google ads on its search pages. Microsoft's proposal would have included an $8 billion investment in Yahoo.

Microsoft, based in Redmond, Washington, had offered to buy Yahoo outright in January. The companies couldn't agree on a price, and Yahoo rejected a $47.5 billion bid in May.

Google, in Mountain View, California, handled 61.6 percent of Internet search queries in April, and Yahoo had 20.4 percent, ComScore said.

Microsoft should take its proposal to buy Yahoo's search business to the Internet company's shareholders, investor Mithras Capital said today in a letter to Microsoft. The firm holds 1.7 million shares of Sunnyvale, California-based Yahoo.

Microsoft rose 47 cents to $28.93 at 4 p.m. New York time in Nasdaq Stock Market trading. Yahoo fell 18 cents to $22.73, and Google dropped $2.18 to $560.20.

To contact the reporter on this story: Crayton Harrison in Dallas at tharrison5@bloomberg.net.

Last Updated: June 19, 2008 18:23 EDT