Microsoft/Claria Deal Dead

Microsoft has ended its acquisition talks with behavioral targeting firm Claria, ClickZ News has learned from a source close to the discussions. Another Microsoft source later confirmed that report.

A Microsoft staffer, who asked not to be identified, characterized the end of the talks as driven by concerns about a PR fallout that could follow a Claria purchase. That company has, in the past, been associated with spyware.

The source says Microsoft will likely consider buying other companies with behavioral targeting technology, but no one is “officially in scope at this time.”

The cessation of talks between the companies puts a quick end to rumors that began just as suddenly less than two weeks ago.

In the week that followed, two discoveries led to speculation a deal had gone through. Claria and KaZaa ended their distribution relationship, which many chalked up to Claria having found another partner. It was also reported Microsoft downgraded the threat risk on Claria GAIN adware product from “quarantine” to “ignore.”