Gates: 'Key decisions' up to Ballmer

Gates was asked about the software maker's plans after the Yahoo bid fell apart, including whether Microsoft would pursue another deal of the same size elsewhere.

Possibilities include large Internet companies like Time Warner Inc.'s AOL and News Corp.'s MySpace and promising startups like Facebook Inc. and LinkedIn Corp. Microsoft already owns a 1.6 percent stake in Facebook, the second-largest social network behind MySpace.

"Well, the key decisions on that will be made by Microsoft CEO Steven Ballmer, who took a look at Yahoo and decided that on our own he likes the stuff that we're doing," Gates said, according to a pool report.

"We need to show the innovation and it's a very competitive space," he added. "I wouldn't rule out some partnerships but we don't have anything imminent there."

Microsoft Corp. made an unsolicited bid for Yahoo Inc. worth $44.6 billion, or $31 per share, in hopes of challenging online advertising and search leader Google Inc. The value of the cash-and-stock deal declined to $42.3 billion, or $29.40 per share, reflecting the decline in Microsoft shares since it began its pursuit of the Internet pioneer.

In a last-ditch effort to seal a deal, Microsoft raised its offer to $47.5 billion, or $33 per share, but Yahoo wanted more and Microsoft withdrew the bid Saturday.

Microsoft's intense pursuit of Yahoo is widely seen as an acknowledgment of weaknesses in Microsoft's solo Web search and advertising strategy, and the software maker now needs to prove it can innovate without Yahoo as a partner.

Gates said an investors' meeting in July would be Microsoft's chance to "really go through and explain why the work by Microsoft research makes us feel that in that online area where we're going to do some breakthrough work," Gates said.

Gates made the remarks after a meeting and dinner with South Korean President Lee Myung-bak. The Microsoft co-founder was on a brief trip to South Korea, which he said was his first since 2001.

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Gates: 'Key decisions' up to Ballmer

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