Claria, based in Redwood City, California, was previously known as Gator, but changed its name because of the controversial ad-delivering practices associated with Gator. Claria has been criticized by privacy groups because of the way its software tracks user habits and delivers pop-up ads. It has been sued by a number of companies for the practices, including the New York Times.
The report said that Microsoft is pursuing Claria as a way to catch up with the advertising prowess of Google. It also said that a group of people within Microsoft opposed the deal, worrying that "the move could bring an outcry as critics portray Microsoft as Big Brother, trying to track every mouse click on the Web and profit from it."
According to the Times, Claria initially approached Microsoft earlier this year to see if Microsoft was interested in Claria's BehaviorLink service, which would track the Web use habits of 40 million users with Claria software on their systems. That information would be used to sell ads to publishers, but the ads would be traditional ones, rather than pop-ups. The acquisition talks began as an outgrowth of that meeting.
The report noted that the negotiations may be at a point where they will break off as early as today, killing any potential deal.