aQuantive, Fast Search and Transfer and Farecast each brought in a few hundred employees when they got acquired by Microsoft.

The AOL branch of Time Warner and Facebook were among several others believed to have been on Microsoft’s shopping list. However they have decided to put a stop to any further acquisitions for now.

After the failure of talks with Yahoo!, Microsoft CEO, Steve Ballmer and Kevin Johnson, Head of Microsoft’s Windows and Internet Businesses, explained to the Financial Times that the attempt to buy Yahoo! was with the sole intention of strengthening Microsoft’s advertising business, of which search advertising is the most important part for revenue generation.

Steve Ballmer said, “at the end of the day, this is about the ad platform. This is not about just one of the applications.” Microsoft supposedly would work towards these goals from within and said they had made plans to build a center for search technology in Europe.

Today however, fresh rumours surfaced about renwed talks of a full acquisition of Yahoo! at a price lower than the $33 they had previously offered.

The EU Commission has set itself a 140-day deadline. The investigation should be completed by 2 April 2008. This is the first major setback Google has ever faced in its nine year history. This news will likely keep Google’s stock below the $700 mark it had crossed last week.

Eric Schmidt, CEO of Google, said in a statement, “We are obviously disappointed.” Assuring investors and the press that the company would work with the commission, he added, “We seek to avoid further delays that might put us at a disadvantage in competing fully against Microsoft, Yahoo, AOL and others whose acquisitions in the highly competitive online advertising market have already been approved.”

If EU regulators rule against Google, it could influence the US Federal Trade Commission’s ruling as well. Either way, this delay could actually damage Google’s chances of competing with Microsoft and Yahoo! in the online display advertising market.

Microsoft officially entered the market in May with the aQuantive, a month after Google bought DoubleClick. Microsoft’s acquisition passed regulatory approval in August whereas the Google-DoubleClick deal ran into trouble, first inviting scrutiny from the FTC and then the EU Commission.

Similarly, Yahoo! acquired Right Media and Blue Lithium to keep up with Google and Microsoft. Their deals have also managed to avoid scrutiny. This isn’t surprising, though, considering Google controls more than 80% of the paid search advertising market, whereas both Yahoo! and Microsoft have less than 10% market share in Europe.

While Google wades through legal loopholes, Microsoft could potentially build up a strong offering and establish a lead that could make things difficult for Google / DoubleClick in the future. Whether they can actually pull it off and make good use of the time “gifted” to them by the EU Commission remains to be seen.