ClickZ, citing a Microsoft staffer close to the talks, broke the news that Microsoft has ended acquisition talks with behavioral targeting firm Claria. The source, who asked not to be identified, said concerns that a PR fallout might follow the purchase Claria, which has been accused in the past of acting like a spyware firm, effectively resulted in ending the discussions. The source told ClickZ that Microsoft would consider buying other companies with behavioral targeting technology.

News of a possible buyout emerged nearly two weeks ago. Rumors that the acquisition would go through were fueled when Microsoft's anti-spyware program downgraded the threat risk on the Claria GAIN adware product from "quarantine" to "ignore" (see adjacent graphic).

Also, Claria and Kazaa ended their distribution relationship, leading some to believe the move was part of an effort by Claria to improve its image before the buyout. Kazaa vehemently denied that was the case, arguing instead that the relationship had ended because Claria's performance had not been up to snuff.

Claria has transformed itself into a behavioral targeting and personalization firm, focusing on its BehaviorLink ad network, which uses Claria's user-tracking technology to display targeted ads on publishers' sites.