Microsoft Eyes Google As It Digs Web 2.0 Media

Ballmer joined with media giants, including Viacom, Walt Disney, Microsoft, News Corp's Fox unit, and CBS to proclaim they will fight to eliminate copyright-infringing content uploaded by Web users and will block any pirated material before it is publicly accessible.

He said the initiative will foster the development of video content. "The cross-industry dialogue that resulted in these principles are an important step forward in establishing the Internet as a great platform for video content -- a platform that allows services to innovate and preserves incentives for all creators, big and small, by respecting copyright," Ballmer said.

Conspicuously absent from that group was Google, which along with its YouTube sharing site, is being sued by Viacom for $1 billion in copyright infringement.

Ballmer also said Microsoft has set out an acquisition strategy that will focus on up to 20 smaller acquisitions of $50 million to $1 billion each annually rather than larger deals.

Microsoft is also said to be targeting acquisitions like Yahoo, or social networking phenomenon Facebook, Reuters reported.

Whether Microsoft will buy small companies or large ones, competition with Google is likely to continue to heat up as they vie for control of new media platforms, including online search and advertising.

Ballmer appeared with Facebook CEO Mark Zuckerberg, to speak to the Web 2.0 audience. Both men were reserved in response to questions about reports that Microsoft is in talks to buy up to 5 percent of Facebook in a deal that could value the social networking company at $10 billion or more, Reuters reported.

Ballmer also restated the company's commitment, Reuters reported, to building a powerful Web advertising business and acknowledged that attracting users to its Windows Live search engine will be an important aspect.

Microsoft placed third in the U.S. Web search market with a 10.3 percent share in September versus 57 percent for Google and 23.7 percent for Yahoo, according to comScore Inc.

"The most valuable advertising real estate, in a sense, comes out of search," said Ballmer. "You're never going to grow a big advertising base, never going to attract a critical mass of advertisers if you can't be credible in search."

Another critical aspect of building a Web advertising power, according to Ballmer, is to build software that allows advertisers and Internet publishers to create a market where they can buy and sell advertising on video or mobile phones or on Web sites, according to Reuters.

Ballmer said Microsoft's $6 billion acquisition of digital advertising company aQuantive earlier this year is an important part of that strategy.