Steve Ballmer, chief executive of Microsoft, has delivered a crushing blow to Yahoo!'s hope of renewing bid talks between the two groups, saying that the world's largest software company is "not interested".

Mr Ballmer inflicted his knock-out blow after Jerry Yang, Yahoo!’s chief executive, admitted that he was open to a new deal with Microsoft after a key advertising partnership with Google fell apart.

Earlier this year, Yahoo! rejected bids from Microsoft, which offered $47.5 billion for the web portal business.

Mr Yang told the Web 2.0 conference in San Francisco on Wednesday: "To this day, I would say that the best thing for Microsoft to do would be to buy Yahoo!. Did we want to do the deal? Yes.

"People who know me know I don't have an ego about remaining independent,” he added. "We remain open to everything but it has to make sense."

However, Mr Ballmer said today: “We made an offer, we made another offer and it was clear that Yahoo didn’t want to sell the business to us and we moved on.”

He added: “We are not interested in going back and re-looking at an acquisition. I don’t know why they would be either, frankly. They turned us down at $33 a share.”

Most industry analysts had forecast that Microsoft would have made another run at Yahoo!, particularly as the company may now be bought at a fraction of the May offer price.

There was speculation that, instead of buying Yahoo! in its entirety, Microsoft may have looked into acquiring Yahoo!'s search engine, which ranks a distant second in usage behind Google's.

Mr Ballmer said: "I’m sure there are still some opportunities for some kind of partnership around search but I think acquisition is a thing of the past.

“Everybody needs a good competitor, and we just want the other guys in this business to have a good competitor that they have to think about every day."

Microsoft attempted to buy Yahoo!'s search engine shortly before the Google partnership was reached.

Yahoo! struck the deal, which would have allowed Google’s search-based advertising to run on Yahoo!’s network in return for a share of the revenue, to fend off Microsoft's unsolicited takeover bid and provide a much-needed revenue boost for the struggling company.

It was estimated that Yahoo! could have made up to $800 million a year but advertisers feared the joint venture would lead to a rise in prices for search advertisements.

After months of protests from advertisers and increasing interest from regulators, David Drummond, senior vice-president and chief legal officer of Google, said it was not prepared to damage its reputation or relationships with clients by embarking on a legal battle against the US Justice Department.

"After four months of review, including discussions of various possible changes to the agreement, it's clear that government regulators and some advertisers continue to have concerns about the agreement," Mr Drummond said in a blog posting.

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