Microsoft matched Google’s $3.1 billion (£1.56 billion) bid for DoubleClick but was snubbed by the largest independent broker of online display advertising, according to a source close to the deal.

The news comes after Microsoft and other competitors to Google said they would push for regulators to probe Google’s acquisition of DoubleClick, the internet giant's biggest deal yet, saying the move would stifle competition in the online advertising market.

Microsoft would not comment to the claim that it had been in the running at $3.1 billion.

Last week, Don Dodge, the director of business development for Microsoft's Emerging Business Team, had publicly baulked at a price of $2 billion for DoubleClick, saying that it represented 20 times revenues and that Hellman & Friedman would have to be “kidding” when they suggested such a price.

However, the subsequent reaction of the world's largest software developer to Google's deal has underscored the lynchpin role analysts see DoubleClick playing in the online advertising market and the way in which its acquisition radically expands Google's footprint in the sector.

Brad Smith, Microsoft’s general counsel, said: "This proposed acquisition raises serious competition and privacy concerns. We think this merger deserves close scrutiny from regulatory authorities to ensure a competitive online advertising market."

Jim Cicconi, the head of legislative affairs at AT&T, the US telecoms group, said: "If Google becomes the dominant force in terms of web advertising and becomes the broker, that would be clear evidence of market power and dominant position."

DoubleClick's main business is to serve the disply advertisements that appear on websites. In contrast to Google’s main business, which is focused on text ads, charged for on a cost-per-click basis, DoubleClick charges for ads on a CPM (cost per thousand) basis and concentrates on display ads.

Google has already signalled its intention to diversify outside of its core search-advertising business.

Separately, over the weekend, the company announced a deal with ClearChannel, the US radio group, to supply advertising across its channels, further extending its reach outside of its core search-advertising business.

DoubleClick was bought by Hellman & Friedman in 2005, in a deal worth about $1 billion. Before the announced sale to Google the San Francisco-based private equity firm had divested two divisions of the company for $525 million.

Google announced that it had agreed to buy DoubleClick on Friday. Microsoft and Yahoo! had also been in discussions to buy the group.

Speaking after the deal had been announced, Eric Schmidt, chief executive of Google, said that he expected the DoubleClick acquisition to be passed by regulators. He said: "This is a very, very competitive market in terms of the number of choices."

Google is saying that the advertising market should be looked at in the round, and that it would not make sense to hive off the fast-growing online sector for independent scrutiny.

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