Microsoft and Salesforce.com held "significant talks" but failed to agree on a price, CNBC reported, citing people familiar with the matter.
Microsoft was willing to offer about $55 billion for the world's biggest maker of online sales software. Salesforce founder and chief executive Marc Benioff had expected as much as $70 billion, CNBC reported on Friday.
A potential bidder can go up to $70 billion on the high end. and Microsoft, Oracle and Amazon.com are the companies most likely to be suitors, FBR Capital Markets analyst Dan Ives said in an e-mail to Reuters.
Apart from the high asking price, Microsoft chief executive Satya Nadella was somewhat reluctant to pull the trigger on a deal of such size and consequence for his company, CNBC said.
Microsoft and Salesforce declined to comment on the report.
"Salesforce is the golden jewel in the cloud, given its leadership position and stellar brand and distribution, all which would have fit well within the Microsoft ecosystem in our opinion," Ives said.
San Francisco-based Salesforce leads the global customer relationship management (CRM) market, which is valued at $23 billion annually, according to tech research firm Gartner.
CRM software helps companies organise and track sales calls and leads.
Salesforce provides its services online, with no software directly installed on PCs, making the company attractive to technology giants such as Oracle and Microsoft, which have been late entrants into the fast-growing cloud computing market.
Bloomberg reported last month that Salesforce had been approached by a potential buyer. This triggered speculation that Microsoft, Oracle, IBM, Amazon and SAP could be in the running for Salesforce.
Microsoft is currently not weighing an offer for Salesforce, Reuters reported this month, citing two people familiar with the matter.
SAP chief executive Bill McDermott said last week his company would not buy Salesforce. He said SAP's richly valued rival was unlikely to be acquired by any other player in the industry.
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