Gates: Microsoft shifts focus after Yahoo offer

JAKARTA, Indonesia -- Microsoft will focus on growing its own advertising and Internet search business after it withdrew its takeover offer for Yahoo, Chairman Bill Gates said Friday.

Microsoft has not presented an alternative strategy to compete with its dominant rival in the Internet business, Google, since withdrawing a $47.5 billion bid for Yahoo last weekend.

Analysts have been left wondering how the world's largest software maker will increase its share of that multibillion dollar market without a major tie-up.

"We have always felt we could do very well on our own and now that's the path we are focused on," Gates said in an interview with The Associated Press in Jakarta on Friday.

"The standard strategy for us is to just hire great engineers and surprise people at how well we can compete, even with a company that's got a strong lead," he said.

Gates says Microsoft remained open to making acquisitions, but declined to comment on possible candidates, such as networking sites like Facebook in which Microsoft already holds a 1.6% stake.

"You never know if there's going to be a deal that makes sense," he said.

Microsoft has developed its own search-ad platform and bought aQuantive, an Internet advertising company, for $6 billion, but its U.S. online operations are loss-making.

It has captured just 10% of U.S. Internet searches, compared to Google's 58% and Yahoo's 22%.

"We are in software very broadly, but that advertising piece, we think, is a very exciting area," he said.

Gates also said that Bill and Melinda Gates Foundation has donated $3 million for emergency relief efforts in Myanmar and will provide software to help reunite family members separated in the cyclone.

The funds were transferred to the aid agencies Mercy Corps, World Vision and Care "so they can go in there and help as quickly as possible," he said.

Gates was in Indonesia to meet with government leaders, including President Susilo Bambang Yudhoyono, at The Government Leaders Forum.

After heading Microsoft for more than three decades, Gates will resign his chairmanship in July and retain just a part time position there.